I love hearing people get excited about a career in real estate, either as an investor or an agent. Today, I’m going to discuss your “passive real estate investment portfolio,” which happens to fall into the “real estate investor” category. This post is geared more towards the beginner real estate investor who is looking to grow their real estate portfolio safely. To be successful in real estate, you need to understand “systems” (or be willing to learn) and then properly implement a system or multiple systems. Today, I would like to share 4 tips on scaling your passive real estate investment portfolio safely and effectively.

Noun: Scaling (skey-ling) The act of arranging in a graduated series. (Acquiring more properties & growing your portfolio)

Market Analysis – Research Your Real Estate Market

I tend to buy investment properties (rental properties) in areas that I know well. With that being said, I still perform a comprehensive market research analysis on every property that I intend to purchase. Smart real estate investing provides an opportunity to make a lot of money. However, making just a few uneducated decisions in real estate could put you into a bad situation and cause you to lose a bunch of money.

Make sure you get the answer to every one of these questions. Then, plug the answers into your system and determine whether the property is a “sound investment.”

• What’s the average sale price of properties similar to my interest?
• How many days on average are similar properties on the market before selling?
• What are similar properties in the area renting for?
• What upgrades or fixes has the current owner made since purchasing the property?
• Is the current owner self managing or paying a property management company?
• What are the current “Net Operating Expenses?”
• Calculate ROI and workup a cash flow analysis
• Find out why the current seller is interested in selling the property?

Plan of Action – Planning To Buy An Investment Property

The first part to your “plan of action” is to find affordable financing that makes sense. Financing has always been the number one challenge that new real estate investors face. More than likely, a beginning real estate investor has never asked a friend, family member or hard money lender for the amount of money it takes to purchase an investment property. If you can find a generous business partner with deep pockets who is willing to lend you cash money at a reasonable rate, you’ve just conquered one of the hardest and most important steps all new real estate investors face. If you are not lucky enough to have a wealthy friend that is willing to partner up, you will need to get comfortable raising money from friends and family members.

The second part of your “plan of action” is to map out a reasonable repayment plan. You’ll want to make sure that your newly acquired rental property can generate enough monthly income that will enable you to re-pay your loan plus interest and to cover your net operating expenses. Keep in mind, one rental property is not going to make you rich and rental properties are long term investments.

When I purchased my very first rental property, I netted a measly $300.00 per month after re-paying my loan plus interest and covering my monthly net operating expenses. But, I had a plan and a long term goal of owning 15 rental properties that all averaged a net profit of $300.00 per month, which would generate $4,500 of passive monthly income for myself and my family.

“If you fail to plan, you are planning to fail!” ~ Benjamin Franklin

Real Estate Investment Programs (Systems)

As a new real estate investor, you are going to want to research a few well known successful real estate investment systems. The biggest mistake any new investor can make is to try to re-invent the wheel. When I began my career as a “real estate investor,” I researched three well known successful real estate investment programs and chose the one that I felt would work best for me. I followed that system to a tee and I DID NOT compromise the integrity of the program by adding any of my own ideas.

NOTE: An important piece of advice to any/all new real estate investors. Any proven successful real estate program (system) is just that, “Proven Successful.” You must fully trust in the system you decide to follow and dedicate yourself to following that system to a tee. One sure way to fail as a new real estate investor is to think that you know more than the system you’ve decided to follow.

Maintaining A Steady & Comfortable Growth Rate

“Scaling” is simply the act of procuring more real estate property and growing your real estate investment portfolio. I’ve seen many cases where beginner investors rush into buying multiple properties right out of the gate without testing their system. In the investor world, this is known as “Scaling to too early.” If you are serious about expanding your real estate investment portfolio and becoming a successful investor in your area, you should start by purchasing one single property while dialing in your system. As you perfect your system, you can then begin buying more properties and expanding your portfolio.

BONUS:

Our Real Estate Investing Program

I wanted this post to be solely directed at helping beginning real estate investors and NOT a plug for our personal real estate programs. With that being said, it’s hard to talk about following a specific real estate system or a proven, successful, real estate program without mentioning the specific program(s) that we follow each and every time we buy an investment property, wholesale real estate or flip a house. So, if you’re interested in learning more about our “Wholesale Real Estate Program” or our “How To Start Flipping Houses Program,” please find our contact information below.