Buying properties is an important part of growing your real estate portfolio. Of course, the more properties you acquire, the more challenging it can become to manage all of them. Fortunately, there are some things you can do to make managing everything easier while still retaining the capacity to be profitable.
Create an LLC
While your real estate portfolio exists to make you money, make no mistake, owning and leasing properties is a business. As such, it’s important to choose a business structure that will work well for your portfolio. LLCs can be a great option for property owners who rent their properties out since they separate your rental business from your personal finances. To maximize protection for each of your assets, form an LLC for each rental property. That way if there are problems with any one of the properties that result in you being sued, the other ones can’t be used as collateral, and neither can your assets.
Hire a Property Manager
There’s a lot that goes into the day-to-day managing of properties. While you could try to handle this yourself, if you have a growing portfolio that is generating solid income, it may be better to hire a property manager. You have lots of options here. You can hire a property management company, an experienced property manager, or even someone qualified but with less experience. College graduates with a business degree have the skills to manage a large portfolio. Hiring them instead of a management company may be a more cost-effective way to go.
Analyze the Profitability of Your Properties
Time has a way of changing things, including how profitable your properties are. The only way you’ll be able to track the profitability of your properties is to analyze your portfolio regularly. While some fluctuation is to be expected, if a property is consistently costing you more money than it’s making, it may be time to let it go. Get the property ready to sell and put it on the market so you can move on to other, more profitable options.
Managing a growing real estate portfolio isn’t always going to be a walk in the park, but there are things you can do to make it more feasible. Create LLCs if you haven’t already, hire a property manager to take on the day-to-day responsibilities, and continue to analyze the profitability of your properties. This will help you make sure your portfolio is working for you, rather than you working for it.
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