Ready to go big? Building a Detroit real estate portfolio means investors benefit from one of the best ways to grow long-term wealth. However, it's not as easy as buying single-family homes or multi-family units here and there and letting people live in them! A successful (and profitable) portfolio requires expert insights, the right strategy, and the right properties.
If you're considering how adding more properties can benefit your financial goals, we're here to help! Income from a few Detroit rental properties is excellent, and more properties (and wealth) are within your reach. Before you start looking online for your next rental property, let's walk through a few steps to make sure you build a portfolio with profitable properties and long-term stability and wealth.
Here's how property owners can get started with growing a successful portfolio of Detroit investments!
Research, Research, Research
A cheap property isn't always the best addition to your portfolio. If it needs too much work, isn't in the right location to maximize the Detroit rental market, and doesn't appeal to potential tenants, you've bought yourself a sinking ship that can take down the rest of your portfolio—especially as repeat failures grow.
While it takes some time to find the right investment properties, the time you put into researching the best rentals is time well spent. When growing a portfolio, you want every new property to add to your cash flow and profits.
Successful investors can spot a good property when using the right tools and research to make wise investment decisions. Make sure your analysis includes information about:
- The location: Is it close to highways, retail, and restaurants? Is the neighborhood excellent for walks in a nearby park and good schools? Location is a critical factor that Detroit renters consider when choosing their next rental home.
- The competition: What can you learn about other similar rentals in the neighborhood? Is it a popular area for renters? Make sure the property can compete with other rentals to attract high-quality residents and generate enough income.
- The financial details: Can you make enough money on this property? When you compare to other similar rentals, look at those rental rates and compare to the potential property's square footage, number of rooms, and bathrooms. Based on the sale price and estimated monthly rent, project your potential income for the property.
If you're not sure where to get this information for your potential Detroit investments—or how to use it—an expert Detroit property manager can help!
Choose a property manager with extensive rental market experience like Own It Detroit Property Management to help you find and review the research before purchasing your next property.
Set up Your Business
As your portfolio grows, you need protection for your personal assets. Most investors with significant Detroit portfolios choose a business entity to separate personal assets from investment assets and income.
Setting up an LLC or a different entity that works best for you also protects your properties and income. If anything goes wrong with a property, an LLC can minimize the impact on your income or long-term success.
As you grow, an LLC may no longer offer the kind of protection you need. If you're not sure which entity is best for you, consult a specialist attorney and the right property manager. They can talk with you about your goals and how you want to structure your portfolio of Detroit investments, then guide you through the process to set up your business.
Avoid a Money Pit
We already touched on this fundamental principle to keep in mind, and it's worth emphasizing again: one bad Detroit property can spoil the bunch—especially in the early stages of portfolio growth.
When growing your real estate portfolio, it might be tempting to buy a cheap property with the idea that you can renovate into a renter's dream home and make a significant profit. However, we rarely see this happen—unless it's an episode of your favorite home improvement TV show!
Money pits are money pits for a reason: they are neglected and often beyond repair, even if you buy them for next to nothing. Rather than spend too much time and money trying to revive a lost cause, it's best to leave those properties alone.
Choose Detroit properties that require minimal renovations to get them rental-ready or flipped and ready for sale again. The less money and time you need to put into a property to make it a worthwhile investment, the more money you make on rental income or the after-flip sale!
Take Your Time and Choose a Best-in-Class Real Estate Expert
Growing your portfolio doesn't have to happen all at once. As one property becomes profitable, start looking for the next addition to your portfolio! The right Detroit property manager can help keep an eye out for the best properties. When you're ready to add another one, they already have the research and recommendations to add to your portfolio—and long-term wealth!
Choosing Own It Detroit Property Management means you have a best-in-class expert to help you grow your portfolio—one property at a time—to meet your goals and maximize your cash flow. Plus, we manage the renovation process and make sure all of your Detroit investments start adding profit to your portfolio as soon as possible.
Ready to grow? You can learn more by downloading our free, professional resource: How to Grow Your Portfolio With a Property Management Company!