Memphis Real Estate Investing

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5 Secrets You Need to Know About Owning Multiple Cash Flow Properties

Fri, Jan 26, 2018

multiplecashflowproperties-scalingportfolio-1.jpgNo real estate investor sticks with one investment property and expects to find long-term wealth. No, for many, it is only the beginning. They plan to acquire many cash flow properties throughout their careers as investors.

When it comes to owning multiples properties, however, there is some strategy involved. Investors should be looking to reduce their risk by buying across multiple markets, should have a clear plan to manage their debt, scale their properties and, most importantly of all, know exactly who they want managing their investments.

Are you prepared to level up your real estate investment business?

5 Need-to-Know Secrets About Owning Multiple Investment Properties

It helps hedge against risk as the economy shifts.

Whenever anyone talks about any kind of investment, we hear about diversifying. It’s no less important for real estate investors. Owning multiple cash flow properties helps diversify an investor’s portfolio in two senses: if one property is vacant, the others will help cover the cost during turnover, and as the economy shifts, having multiple properties across different markets will help hedge investors against risk.

Whether that’s full-blown economic crises, a real estate bust, or natural disaster, having properties that span across diverse markets can prevent investors from falling prey to unexpected issues that can crop up in one market or another. 

It equips you to scale and scale quickly.

As you grow your portfolio, it only becomes easier to acquire more investment properties. As you create more streams of passive income, that cash flow means that you will be able to finance investment opportunities that come your way more quickly. Where saving up might have been a feat before, you’ll find it becoming a breeze. Adding properties multiplies these streams of income as you expand your portfolio, which allows you to scale quickly once you get the ball rolling! 

An actionable plan will get you everywhere.

A clear vision is key in this business. Aimlessly, impulsively choosing properties rarely works out. What does is being strategic. Like knowing how many properties you want to acquire in a given year, what price point those properties should be in, what markets you want to expand into, and what gaps they should fill in your portfolio.

Smart real estate investors don’t stop with saying that they want to add 10 properties to their portfolio in the next two years. They get more detailed and think about their market diversity, whether or not they want to try new strategies, and whether or not their current properties are serving their portfolio well. It’s a constant task to weigh properties against one another, to measure success and to find what will punch up to that next level.

Related Article: The Passive Real Estate Investor's 5-Step Action Plan Before Buying a Property

Property management is crucial to your success.

Growing a large, successful passive real estate investment portfolio isn’t just about a diverse portfolio in the right markets. More than that, it’s about having the right team behind it. Your property management is everything when it comes down to your success as an investor. You can be in the best markets with the greatest opportunities you can imagine, but if you have a subpar management team, that’s likely the results you’re going to see. If you’re in a mediocre market with an incredible team, you’re probably going to find pretty great results.

That’s because property management is the make-or-break service for real estate investments. They’re your first line of defense, the public face, and the ones steering the ship. With great management, investments thousands of miles away will feel no different from investing in your own neighborhood.

You shouldn’t have to worry about your investments. That’s why it's so important to be diligent in knowing your managers, your team, anyone you work with, as well as the properties you acquire.

Your debt-to-income ratio matters.

When it comes to taking out multiple mortgages to buy multiple properties, the bank is going to look at your debt-to-income ratio. Are you bringing in enough money to cover your debts so that they (the bank) are still going to get paid? They need to know that you are good at managing your debt-to-income ratio. For example, when you borrow, does at least 70% of what you make in rent from your properties cover your mortgage payment?

This can help your ratio significantly and increase the chances of banks lending to you in the future. It’s also why being cash flow positive is so important beyond the obvious reasons!

It’s a lot easier to gain more properties when you aren’t bogged down in the day-to-day details. You can scale faster and accelerate your passive income earning potential through turnkey real estate with Memphis Invest...starting today!

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Chris Clothier
Written by Chris Clothier

Entrepreneur, writer, speaker, ultra-endurance athlete, husband & father of five beautiful children. Chris puts these natural talents on display every day. As a partner at Memphis Invest, Chris addresses small and large audiences of real estate investors and business professionals nationwide several times each year. Chris is also an active writer, weekly publishing real estate, leadership, and endurance training articles.