When we embark on the journey of investing in real estate, we all have some sort of vision for ourselves and our financial future. For many of us, it looks like a worry-free retirement, escaping the rat race, or supporting our family's future. Maybe we're looking to take vacations or pay for a child's education. Whatever the motivation is, we have this in common: we want to take financial control back.
There are things in life that threaten to steal our joy and peace of mind, and investing in real estate is just one way to secure them.
But here's the problem: so many of us think that we'll achieve all of these financial ambitions through a single rental property. We start our portfolios and never grow, failing to realize this essential truth:
You can't build long-term wealth with a single investment property.
Jumping in and starting is a bold first step, but it isn't enough if you want to truly build and sustain wealth. So how do you grow from that first investment property to many? How can you ensure that your passive investment portfolio has the momentum and strength to offer real financial freedom?
Here's how that first investment property becomes a full portfolio and brings real, lasting wealth.
4 Steps on Your Journey to Generating Wealth from Real Estate Investment
Start with a Solid Foundation
If your goal is to build long-term wealth through real estate investment, you have to start with a solid foundation. This encompasses several factors, but for the passive investor, it means locking down that trusted relationship with a turnkey provider. When you're looking to build a successful portfolio, it should be understood that this portfolio will grow quite large with time. You will not and should not bear the burden of managing and maintaining the properties you own yourself.
Instead, begin by surrounding yourself with the right people. Advisors, management teams, maintenance and renovation experts, and portfolio managers that not only guide you with their years of experience but provide the necessary infrastructure to support a growing portfolio are essential. One of the problems that investors can run into when relying on themselves or on a self-made network is a lack of manpower and resources to manage a large portfolio properly.
This solid foundation—a trusted turnkey provider—ensures that you can sustain your growth as you build your portfolio up with new property acquisitions without having to seek out new support structures.
Plan to Scale Your Portfolio
We find that there an astonishing number of real estate investors that are content with one or two investment properties. While any investment is a good start, a few investments to your name is not sufficient to generate long-term equity or cash flow for true wealth. Every investor should have it in their minds to grow and scale their portfolio from the very beginning.
It can be tempting to grow comfortable in your accomplishments thus far. Our encouragement is to not settle for "good enough" but to strive for your best financial future. If you don't know how to go about acquiring multiple investment properties, talk to your advisor. Memphis Invest is more than happy to help you develop a game plan that suits your needs, ambitions, and lifestyle.
Expand and Explore
When we talk about scaling your portfolio, it isn't enough to merely acquire properties. There are many qualities in an investor who goes from a single property to that lasting, long-term wealth we're after.
A few key qualities:
- Willingness to explore new markets and strategies
- An openness and hunger to learning new things
- An understanding of the balance between opportunity and risk
- A drive and desire to experience consistent growth
It's not enough for us, however, to plan or desire to acquire more properties. We have to actually do it. While it may seem risky to grow as you put more effort and resources into your rental properties, you can take assurance in scaling at your pace with due diligence to support each move along the way.
Refine and Reflect
A key step to building investment wealth comes after we acquire and hold our investments. The ability to examine and reflect on what we have and act accordingly is especially important. As buy-and-hold investors, we can get lost in the big picture when that picture spans decades or we neglect to revisit investment performance and purpose over time.
This can involve reflecting on a market as a whole, as it may not offer you the same opportunities that it once did. You may want to perform a 1031 Exchange and jump into a new up-and-coming market that better suits the direction you want to take your portfolio.
As an owner, you not only have to think about acquisition, but you have to consider refinement and purpose. This is what makes a portfolio truly streamlined and hassle-free.
As far as reflection goes, an investor should always be learning not only from outside resources but from their own experiences. Through the process of investing, even passively, you will find what suits you and where you want to be. Don't ignore this knowledge or try to fit yourself into an image of investing that doesn't line up with your ambitions.
Instead, team up with a turnkey partner who can join with you to achieve them.