9 Tips on Buying Multiple Properties
Are you planning to start your journey to becoming a successful real estate investor– or just looking to buy multiple properties for you AND your family’s future?
Real estate investors who know how to buy multiple properties find themselves substantially better off than the rest of the population. Of course, before complete success in ANY endeavor they put their minds into, it’s important to know your way around the ball game until financial freedom becomes easily achievable.
Are you ready to learn a thing or two about buying multiple properties? Here are our nine expert tips you’ll need to know about purchasing several properties in real estate.
Be sure to purchase below market value
Most people will agree that you make your money when you buy and NOT when you sell. With real estate investors, however, they would have to buy below market value to get the most out of their properties.
Research your market and look for investment properties that you can buy at lower prices. It could be foreclosed homes or properties that have been on the market for too long, as well as sellers eager to sell quickly. It may take a lot of research to find these types of real estate properties, but when found, you’ll be gaining instant equity you can use to buy more investment properties.
Adding value through renovation
Do you ever wonder how a property gains value? Well, a great way to add value to your property and gain equity quickly is through cosmetic renovation. You’ll notice that very few property investors look at a distressed property and see its potential. BUT, these poor-conditioned properties often fetch well below market value compared to similar well-kept properties, and smart real estate investors add a great deal of equity to their investment property quickly by making renovations that are not so pricey.
Get property values reviewed regularly
So many real estate investors forget to get their property revalued, and it’s one of the biggest mistakes they can ever make. Determining whether or not your property has a higher valuation than before can help you if you want to know how to buy multiple properties. If you get a higher valuation, it means you’ll have access to more equity for investing, and in any case, expenses for it are often tax-deductible.
Hire a mortgage broker
It’s important to know that getting a great mortgage broker can help you become successful in buying multiple properties. And why is that, you ask? Financing investment properties have become much harder than it was before. Having a trustworthy mortgage broker by your side will help increase your borrowing capacity and will help you get approved for more mortgage loans. In turn, you can grow your real estate investment portfolio faster.
Know your way around the market
Getting to know your way around the real estate market shouldn’t limit you to the LOCAL real estate market alone. As a property investor, you’ll want to invest in different states and neighborhoods to build a diverse property portfolio. It is also crucial to know how to analyze and research the area effectively and know what to look out for. To avoid investing in the wrong location, you need to conduct a real estate market analysis and investment property analysis.
It’s vital to chase the trends in your area. The real estate market is constantly changing, and governments are always updating laws and regulations concerning real estate. If you fail to stay up-to-date, it can have huge implications on your property investments.
Build a positive cash flow whenever possible
Investment properties generate positive cash flow when your rental income is greater than the sum of your expenses. If all the properties you buy are putting extra cash into your pockets, you can afford to service these properties and expand your portfolio. However, if your property is generating a negative one, you will soon find yourself without enough money to keep the properties running. Maintain a positive cash flow when possible and use the extra cash to fund the expenses involved in obtaining equity loans to buy multiple properties.
Know when to sell to expand
Buying multiple properties doesn’t mean you should never sell them. Sometimes, selling makes more sense than keeping an underperforming property. Know when to sell to expand! Learn when it’s the right time to sell a property and use that money to reinvest in another that is likely to perform better. If your property has all the negative signs of a bad performing property, don’t wait and hope that change happens someday. Sell it to buy something with a better rate of return.
Interest-only loans are key
Lower your weekly/monthly expenses and save up cash flow with an interest-only mortgage!
Principal and Interest loans have larger monthly expenses meaning that you will have to find a way to pay for these loans, even if it means taking money out of your own pockets. Extra costs will limit how quickly you can save up money for future investments. Meanwhile, if you’re on interest-only loans, you give yourself the best chance of expanding into new properties due to the lower ongoing mortgage costs.