Any good investor in real estate should be building their portfolio having an end in mind. Long-term thinking is very important and it is what separates sustainable portfolios from fragile ones.
Diversification over time
As your portfolio size grows and you start to have multiple assets and properties having a diverse portfolio is very important. This can include different types of properties, which could be large rental units, apartments, single houses, work places, warehouses and even businesses. This kind of diverse portfolio always protects you against the market and ensures that whatever happens you’ll be protected. Another note to keep in mind is you should aim to be in different locations. This helps you prevent yourself from unexpected things like natural disasters and more likely events, such as certain areas in increasing or decrease in value. If you manage to get in early in an area where people have not yet caught on that might be valuable in the future that could be an extremely lucrative investment when the value of the area rises.
Holding, selling and refinancing
You should keep in mind that not every property you buy is going to be with you forever. There are multiple actions you can take on the properties you have bought the past. Such as selling them to redeploy capital for a next move, using them for a trade or a package deal to acquire another asset or refinancing property that has been paid off to increase liquidity. All these decisions are strategic and not reactive.
Planning the exit before you need it
As I mentioned before you’re going to need to have an end in mind, whether you like it or not. Whether your end goal may be selling off your whole portfolio for an unimaginable amount, passing your assets on to who you see fit after you get old or you may have decided that you brought your portfolio by yourself to where it can continue on its own with little management and you just want to retire and make a few decision decisions a month. Planning where you want to stop is a good idea for when you want to stop having this as your main focus. If you have managed to go your portfolio into the tens of millions or above, you can easily get a real estate firm to manage everything for you for a percentage of your income and you or whoever comes next, does not have to worry about anything. If not then, choosing a loved one to pass on your assets for them to continue growing your portfolio or managing it how it is it’s probably the smartest decision. As smaller portfolios are not hard to manage to need to employ a real estate management firm.
Remember Real Estate wealth is created by decisions made years in advance
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