Does the idea of growing your portfolio sound appealing? We've surveyed the real estate investors at Memphis Invest and for most, it does! Real estate investors should be able to have a strategy for future growth and look forward to a flourishing, successful business. That said, there’s a danger in growing too quickly. The best way to set yourself up for success in real estate investment is to maximize the efficiency of what you have, whether it’s two properties or twenty.
When you have investing in real estate down to a fine art and everything is working as well as it can, then talk about adding more investment properties to the mix.
4 Steps to Maximizing Portfolio Efficiency & Profits
Identify Common Problems
When problems crop up on your investment properties, we tend to isolate the issue. We think of the one instance and work on fixing it then and there. But sometimes problems don’t come from broken appliances or rowdy tenants. There’s a chance some of your problems may have a common source among several properties and you just haven’t stepped back far enough to see it. Example: Have a recurring maintenance issue? If you’re using the same company across properties to deal with it, maybe things aren’t being properly addressed. If you can find real, common links across many investments, you may find things need to change.
Focus on What You Have Right Now
As real estate investors, it’s so easy to daydream. We all have visions of the perfect property, after all, and there’s nothing wrong with having aspirations! Just don’t let what you want blind you from what you have. If you spend all your time focused on the future without caring for what you have, you won’t have much of a future at all.
Know When to Streamline
Priorities change. Neighborhoods shift. Properties end up resented. Instead of holding on to a property you just don’t care about anymore (or if things just plain aren’t working out), know that it’s okay to sell. You aren’t a failure for wanting to cut down. Knowing when you need to move on from a property is valuable — not a failing. When you cut properties that you don’t want or need anymore, you’ll have more time to focus on what you truly value in your investments.
Consider Carefully Before Expanding
There comes a time when we need to grow. You’ve maximized your profits (or gotten pretty close) and are looking to add a new investment to your portfolio. Great! Before you buy, however, take what you really want into consideration. How will this fit in with the rest of your portfolio? Are you interested in expanding to a different type of investment? Are you investing in a way that you find engaging? Beyond just running the numbers to ensure positive cash flow, consider the commitment of your expansion.
As an investor, are you really heading to where you want to be?