Building a real estate portfolio can take time, but the good news is that if you are committed to doing it, you can make it happen with a good investment, smart development, and a very simple business plan.
While there are certainly many different ways to start that real estate portfolio, here are just a few of the major ones when it comes to finding and building a portfolio that can provide you lasting income and a great stream of money down the road:
Start With One Property!
Sounds simple, right? Start with a single property, whether it’s a single family home, or a duplex, or even a small apartment building if you have the money and resources to maintain it. When you start with that one and begin renting, you can take rent money and use it to purchase more properties over time, doubling down on your real estate portfolio and making more and more money over time.
Make Sure You Can Maintain
Buying and renting real estate is only half the battle. As the landlord, you must be able to satisfactorily maintain the property with cleaning, maintenance, and things like plumbing, landscaping, and more. Budget that into your considerations and remember to maintain your first property before you start buying up more!
Understand Your Tax Implications
When it comes to write-offs, tax claims and more, every single state is different – so you need to be sure that you understand your tax implications of owning specific properties. In many cases, you can take various write-offs thanks to what you own or what you may do with the property on your year-end taxes. Free tax calculators are great tools to assist.
Get an LLC To Protect Yourself
Finally, it’s critical that you develop an LLC (limited liability corporation) or an s-corporation in order to protect yourself legally. That way, you can protect your own personal assets if something goes wrong, and a tenant sues you, since they will only be able to sue the company and not your own personal assets. Having an LLC will protect you from lawsuits and other issues, and it may actually also help you in pass-through taxation to take advantage of write-offs and tax help when working with your accountant at the end of the year!
All in all, building a real estate portfolio is, for many, one of the best things they’ve ever done, and it is something that can be a wonderful experience for people looking for residual income and more. Take the time to develop it right, and you will notice that the benefits far outweigh various issues, and can be a boon to your bank account when you develop slowly, properly, and consistently. Good luck with your portfolio, and enjoy the process of finding a great home or duplex to purchase for renting purposes!