‘How can I grow my real estate business?’ This is a question asked by many real estate investors that want to expand their portfolio.
Although owning one or two rental properties can be profitable, it’s not enough to get rich off of real estate. So at this stage, many real estate investors start wondering what they can do to take their business to the next level. We’ve put together 5 important things you need to do.
Here is how to grow your real estate business fast:
1. Invest in Education
Before you begin expanding your real estate portfolio, it would be wise to invest in some more training first. You may know a lot already with a rental property under your belt. But managing one rental property is much different than managing an empire. So continuing your education is key if you want to build a successful real estate business.
Educate yourself on topics such as current housing market trends, business growth strategies, effective networking, and finding and purchasing investment properties quickly. You can get a real estate education from a wide range of sources including online courses, webinars, industry magazines, real estate blogs, and mentors.
2. Have a Real Estate Business Plan
You may not have felt the need to have an official business plan with your first rental property. But it’s time to create one. A real estate business plan will keep you focused and prepare you for any unforeseen situations you might experience along the way. Be sure to include the following in your plan to grow your real estate business:
- Investment strategy – Fix-and-flip strategy, buy-and-hold strategy, house wholesaling strategy, and purchasing rental property are some of the strategies you can use to grow your real estate business. Wondering how to buy multiple rental properties? Some of the strategies you can use to grow your real estate business include the 1031 exchange method, the snowball method, and the BRRRR strategy. Get familiar with each investment strategy. Will you expand using more than one? Or will you stick to what you know?
- Investment goals – Are you focused on long-term appreciation or generating cash flow? Do you want to be an active investor or to make passive income? How many investment properties do you intend to purchase in order to attain financial freedom? These are some of the questions you need to ask yourself when establishing your goals and objectives.
- Financial plan – Think about how you will finance multiple rental properties. Will you go for a traditional mortgage loan or other financing options like private money lenders? You should also have a projection for expected earnings from your investments.
Related: Developing a Real Estate Investing Business Plan for Beginner Investors
3. Diversify Your Real Estate Portfolio
Just like any other investment, it is very risky to put all your eggs in one basket. Diversification spreads your risk and minimizes the effect of housing market fluctuations. Here are some of the ways you can diversify your portfolio and grow your real estate business:
- Invest in different types of property – At times, fluctuations in the housing market only affect specific types of property. For example, only single family homes could be affected when the market moves up and down. This is why it is vital to diversify by investing in different types of property. For example, instead of just buying apartments, diversify by purchasing condos or townhouses.
- Invest in various locations – Let’s say you already own income properties in the Seattle real estate market and the Los Angeles real estate market. You can diversify by purchasing properties in other profitable housing markets such as the Chicago and New York real estate market. However, do your due diligence first before investing in a different location.
- Invest in REITs – Real Estate Investment Trusts are firms that pool cash from investors to purchase major real estate investments. Investing in REITs allows you to access properties that you would not be able to access by yourself. It is also a great strategy for earning passive income with little responsibility and risk.
Related: How to Build a Diversified Real Estate Portfolio
4. Use Real Estate Investment Tools
As you grow your real estate business, you must ensure that the investment properties you are buying have a good return on investment and positive cash flow. Even one or two bad apples can be a serious setback and hinder your growth. Using the right real estate investment tools will help you choose the most profitable income properties in the best locations. The following tools from Mashvisor will come in handy:
- Real estate heatmap tool – This real estate investment software will show you the best areas to buy property. You can use metrics such as listing price, rental income, cash on cash return, and Airbnb occupancy rate to analyze different neighborhoods in a city.
- Property finder – The property finder uses predictive analytics, as well as machine-learning algorithms, to help you find high return investment property that matches your objectives and search criteria. It comes with filters like location or city, budget, miles, number of bedrooms, number of bathrooms, type of property, and rental strategy.
- Investment property calculator – Also referred to as the rental property calculator, this tool will help you analyze potential investment properties for sale. Once you’ve entered details like financing costs, the calculator will show you the expected return on investment in terms of cash flow, cap rate, and cash on cash return. The calculator will also determine which rental strategy (traditional or Airbnb) is optimal to grow your real estate business.
5. Build a Team of Professionals
Managing one or two investment properties on your own is relatively easy. However, as your real estate portfolio begins to grow, you might not have the time or expertise to manage all the properties by yourself. This is why working with a team of dedicated professionals is a crucial part of how to grow your real estate business. For instance, you might need to hire a professional property manager to handle tasks such as marketing, tenant screening, preparing lease documents, maintenance, and evictions. A qualified accountant will manage your finances, while an attorney will ensure that you adhere to the local laws.
Related: Building a Successful Real Estate Team: A Guide for Beginner Investors
Conclusion
According to Andrew Carnegie, “90% of all millionaires became so through owning real estate”. And the fastest way to grow in your real estate career and become a millionaire is to learn how to scale your real estate business. As you figure out how to grow your real estate business, you will earn more passive income and eventually achieve financial independence.
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