Friday, July 26, 2013

15 Tips For Building Your Real Estate Portfolio

15 Tips For Building Your Real Estate Portfolio

We still have awesome mortgage interest rates (read my previous blog at and competitive real estate prices. Yes, prices have gone up quite some. But we have not seen anything yet. They will go up higher. Why we still have some great pricing.

You make money on the buy side, not on the sale side.

So looking at real estate to add to your portfolio is not only smart but we are in the best time period, now! Education and experience are critical to finding good values and navigating the market. You are not expected to have those skills and knowledge, why you need an experienced and competent realtor to help you with this.

Here are the 15 tips to build a robust portfolio:

1.      Know the market you want to buy into. Location, trends, price ranges you can afford, historical trends and rental prices.

2.      Run through the financial scenario and analysis for your return on investment. I have a great investment analysis tool I can provide to my clients for each target property.

3.      Always arrange your financing BEFORE you look for property. Be ready.

4.      Start small and build up. Learn where the sweet spots are in the market.

5.      Never, never, never buy on price. Always buy on value.  Pay attention to location, noise nuisances, crime, schools, access to transportation, potential new developments, and the general attitude of the neighborhood.

6.      Find the ugly ducklings, the needy for a remodeling or the ones with the problems to fix. They represent the under-priced properties. Ideally, you want properties you can purchase, spruce up, remodel and finance for 70% of the after repair value (ARV) or less.

7.      Be careful not to overpay for a property. It just makes for a bad start. But don't expect either to get properties at low ball prices. This is simply not happening in the valley right now. And beware of those advertised 'wholesale' prices which are more of a sales pitch than anything else. I always wondered where they come from anyways, as many I have seen, have higher prices than normal everyday resale prices.

8.      Consider all the costs to renovate or fix before flipping or for rental-ready homes. If you are going to do it, do it right or just stay out of it.

9.      Look for properties that may border vacant land or at the edge of new developments because they have the greatest potential to increase.

10. Make sure you work with a competent and reliable contractors, handymen, and other specialized trades like painters, roofers, plumbers, electricians, etc...

11. Research all the tax implications that would apply to you for your real estate portfolio.

12. When selling, even renting higher priced properties, stage the property.

13. Use banks, mortgage brokers and private lenders to finance your properties. And have some cash for renovations and repairs.

14. Grow your portfolio into different types of properties to reduce risk. Combine single family detached, condos and commercial properties.

15. Work with an experienced and competent realtor to help you select, analyze, negotiate and purchase properties. Use the same realtor to sell or rent.

So when you are ready to build your portfolio, I'd be delighted to hear form you. If you need to be connected with a preferred lender, I can help you there as well.

And if you are ready to search, you can do it here:

Richard Bazinet - Realty ONE Group - Phoenix Scottsdale Real Estate

15 Tips For Building Your Real Estate Portfolio