Investors who find an excellent rental property and become landlords long-term often catch "the investing bug." After all, if you have a great property or two, the sky is the limit as to how big your real estate investment portfolio could grow!
When you are moving beyond just a couple of properties, however, there is the possibility of "growing pains." Here are some strategies that will help you ensure your Central Florida investment portfolio grows steadily for years to come.
Location, Competition, and Comparable Properties
You may initially have gotten a tip or two that lead to your very first real estate investment—but growing a real estate investment portfolio in Orlando or Daytona requires that you invest some hours in getting to know the area inside and out.
The Housing Market in Your Area
- What are people seeking in a rental home?
- Which homes remain vacant—and which ones are rented within a day or two?
- What price points seem to move best?
Knowing things like the vacancy rate for your area can really help you understand whether renters are rare or are common, and which specific neighborhoods and subdivisions are most attractive to your potential long-term tenants.
Comparable Properties (Comps)
- What is the competition like?
- Who seems to be buying up and renting out properties?
- What kind of advantage will you offer?
Consider reading reviews of different landlords online; seeing what people wish they had in a landlord—and what they value in their favorite rental properties—is an easy way to get a leg up on offering outstanding service. This will help you stand out in any Central Florida rental market—whether it's Orlando, Daytona, or even Lake Nona.
When you have a particular property in your sights, what are other properties near it or similar to it renting for? Consider all the "comps" you can find, and make sure you make a competitive offer on the property while accounting for the kind of rent you can reasonably get from it.
This research may seem like research everyone should do when investing—but plenty of people are cutting corners and jumping in on deals that "seem" good, without being backed by facts. Your market research will help you see through clever property listings and find the real winners.
Protect Your Business from Liability
As you add to your business, you may feel a little overwhelmed by the number of assets at your disposal. With more than one rental property—and sometimes, even with just one—it is wise to establish the right "business entity." In the Orlando and Daytona area, investors tend to prefer a Limited Liability Company (LLC)—but the right choice for you should be recommended by your lawyer or accountant.
Business entities allow you to distinguish between assets that belong to the business itself and assets that are your personal property, such as the wages you pay yourself. If you ever have the misfortune of being involved in a lawsuit, an LLC limits your liability to only the assets of the business. These entities can also make it easier to separate your business and personal taxes each year.
Start with a Surefire Success
While a real wild card property or a fixer-upper may feel more affordable as an early property, remember that these properties are actually uncertain. You may have a low sticker price; then, once you are working on the home, you may discover the need for expensive repairs.
It is often better to purchase a reasonably-priced, nearly-move-in-ready property that you know for sure can be rented almost immediately to help you pay its mortgage. These "surefire" properties aren't where you'll find your massive profits—but they get your cash flow rolling, and can be a solid foundation for a growing real estate investment portfolio in Central Florida.
Profits from One Property Lead to the Next
As you find yourself financially secure with your starter investment property—or properties—you should arrive at a point where your cash flow allows you to save up for another property.
Since many properties take a little while to get to this point, it's better—or at least less risky—to bring one property at a time to profitability. This way, you never overextend and lose money on multiple properties at once. If you can remain patient and maintain your research on the markets while one property achieves profitability, you will keep your peace of mind and see steady portfolio growth in Central Florida.
A Great Property Manager Makes Growth Easy!
After a couple of properties, many landlords face a crossroads:
- They can keep managing their properties solo—and stay with their current portfolio size
- They can continue growing—and work with a reliable Orlando property management company to handle the day-to-day work.
Luckily, Verandah Properties makes this decision easy! Allow us to be your property management experts while you continue to grow your real estate investment portfolio in Central Florida.
Trust us to find the great tenants, collect rent, and provide the high-quality seasonal maintenance your investment properties need, ensuring that your tenants are happy. Working with a property manager who serves Orlando and Daytona frees you up to find investments that yield you the best returns.
Want to get started for free? Download our guide, "Real Estate Investing: Grow Your Portfolio." It has the crucial information that landlords in Central Florida need to begin expanding on their investments.