How To Build A Property Portfolio That Pays You Every Month - For Life!
I want you to close your eyes and picture this:
That familiar, delicious, pungent coffee aroma fills your nose…
The sun is peeking out over the horizon, warming the day, and the birds are starting to sing their song.
You walk to the kitchen to fill your cup, and somewhere in the distance you can hear the cars.
Slowly marching on, hooting, a bit of screeching here and there too.
You let out a happy sigh, knowing that you never have to sit in that ever again.
You take a sip of your coffee, and as it slowly warms your body, you wonder what’s on the agenda for the day.
Perhaps a bit of shopping?
Maybe a round of golf?
What about a long, lazy lunch with some friends?
Either way it’s entirely your choice, and it’s all made possible by one thing…
Your property portfolio.
And thanks to that very portfolio, every month like clockwork thousands pour into your account, sometimes you can barely keep up with the SMS notifications.
It all comes down to a few smart real estate moves you made a few years ago, and you can now enjoy the lifestyle you’ve always dreamed of.
No more traffic… No more money problems… No more worries….
But let’s rewind for a second.
What exactly are these ‘smart moves’, how did you build that income-generating property portfolio, and how did you manage to achieve all this?
Let me show you…
REVEALED: The Millionaire-Making Wealth Weapon
It’s no secret that property is the bedrock for many millionaires.
In fact, Andrew Carnegie was even once quoted as saying “90% of all millionaires become so through owning real estate”.
But the thing is there are quite a few approaches, techniques and strategies you can use.
Flipping houses, wholesaling property, and even auctions are extremely popular at the moment.
And don’t get me wrong, there is definitely money to be made doing all of this!
But that money is short-term. It’s profit for today, not tomorrow.
I want to show you how you can build and grow a property portfolio that generates you a lifetime of income.
And that’s where rental properties come in.
You see, with a portfolio filled with rental properties you’ll be able to generate a positive monthly cashflow without ever having to worry about all those pesky factors that most investors or traders get threatened by.
But the real question is how do you find the right properties?
You know the ones I’m talking about, the properties just waiting to pay you…
4 Factors That Make A Property A Rental Goldmine
There are a few factors that can tell you whether or not the property you’ve got your eye on is a solid residential rental investment.
Now keep in mind these don’t have to be absolutely perfect, in fact that’s even quite rare, but the idea is for you to maximize each factor the best that you can. You’ll often find that some just outweigh the others, and that’s normal.
Here are four profit factors you can look at to verify a solid residential rental investment:
Profit Factor #1: The Big L
You’ve heard this a thousand times before, and you’ll keep doing so as long as you’re in the property game.
Good property investing is all about location.
A bad location can scare away tenants, not to mention kick up a whole lot of other problems for you (resale value for example, or even just the ability to sell).
Always be on the lookout for solid amenities in the area, shopping malls, schools, parks, police stations and so on.
This is always a good sign.
Profit Factor #2: It’s All About The Numbers
Property investing, for the most part, comes down to the numbers.
Everything from rates & taxes to rental yields, and even potential touch ups like a quick paint job, has an effect on your bottom line.
At the end of the day you need your cash flow to be positive.
That means, if after all your expenses on the property are paid for you still have money left over, then it’s a positive!
Profit Factor #3: The Rentability
You might have found a property in a great location, but if there are tons of units like yours and the competition for renters is high, it might not actually be a great investment.
One thing you can look out for are incentives offered by owners to renters. When there are a lot of rentals in the market and owners start offering up lovely ‘extra’s’ to entice renters, it might not be the best time to get into that location.
Think of it this way, when there are fewer rental competitors you’re able to keep your property occupied for longer, not to mention you could even demand a higher rent.
Profit Factor #4: The Bigger Picture
Whilst cash flow is a big priority in an income generating property portfolio, you simply cannot ignore or forget your appreciation. If your property is increasing in value over time, you should be set.
Now when it comes to appreciate in your rental properties there are two ways this can take shape.
Firstly, your properties value could appreciate, and secondly your ability to pay down the bond.
If you’re smart you could even leverage your investment to grow your property portfolio using the equity in the properties you already own.
Now remember there are other smaller factors, but these are the four main factors I like to look at.
You might also consider how old the property is for example, or possibly weighing up potential repairs, alterations, or improvements.
The little things can stack up too.
So, let’s say you’ve found the perfect property, and it ticks all the right boxes, what do you do next?
How To Seal The Right Deal For Your Property Portfolio
Ok, you’re ready to dive in.
You have your eye on something specific, you have the down payment, and you want to make absolutely sure that your property decision is the right one.
How do you do that?
Well there are four more location factors you need to cover in order to ensure you’re investing properly:
Location Factor #1: Know The Area
If you’re unfamiliar with the area you’d like to invest in, do some homework.
You always need to do a little research to make sure you’ve got the right info backing up your decisions.
Not to mention having done previous research on other areas means you have a basis for comparison.
So, what exactly do you look at?
Keep an eye on prices in the area, and what types of properties are selling. Try find out if homes are selling for cash, and what type of people are purchasing (tenants vs homeowners).
Some investors are normally cash buyers, so this can sometimes indicate where the experienced money is being poured into.
Location Factor #2: The Right Valuation
Being able to value a property is incredibly important.
If you don’t know how to do this, here’s a piece that can teach you. Either way this is a skill you definitely need as an investor.
Why is value so important?
You need to know if a property is selling above or below market value.
This can mean the difference between a hefty profit, or being stuck with a property potato.
Remember, it’s all about your numbers, and this is perhaps one of the important early numbers you need to keep an eye on.
Location Factor #3: What Are Your Competitors Up To?
First thing you want to do is see what other properties similar to yours are selling for, and what their rental amounts are.
How many are actually available, and are owners offering those incentives? (See Profit Factor #3).
Take a look in the papers and online, not to mention the rental flyers you can get your hands on.
You need to know what the average rental yield is here and what properties like the one you have your eye on can actually generate in monthly rent.
A poor rental yield can (and should) scupper an entire deal.
Location Factor #4: Hidden Costs
Those pesky hidden expenses can be like property cancer.
I’ve seen them turn an incredibly profitable deal into a money-sucking property vampire!
The condition of the property can come into play here. At some point in time you will need to budget for repairs, so it’s good to try figure that out beforehand (even if it’s an educated guess).
Alternatively, you also need to take into account any repair you might need to do, taxes you need to pay, insurance you need to take, and so on.
Don’t kill a deal before the ink on the contract has even had a chance to dry.
Location Factor #5: It’s All About The Bargains
Smart property investors don’t put their money into the same old, tired properties that most investors latch onto.
An undervalued property can sometimes be crucial to a properties ability to generate you a long-term profit.
Think of it this way, if you’re paying full retail value for a property, over the period you own for, you’re losing profit!
That covers the location process, you’re now ready to move onto the actual deal itself.
But how do you find those specific properties, packed with profit potential, in the first place?
How To Find The Hidden Properties Packed With Profit
The problem is great auction deals don’t come around very often.
A lot of them have a serious amount of work needed to be done, and in most cases the numbers simply don’t add up.
But does that mean you’re left to trawl the net to find the good ones?
Of course not!
Here are three great ways you can source undervalued properties:
Profit Potential Source #1: Desperate Owners
Unfortunately, the reality is that some people simply get into debt and cannot afford their properties.
On the other hand, some people just need to get rid of a property fairly quickly (immigration comes to mind here).
Either way, both can potentially offer you a great way to find undervalued properties.
Keep an eye out for dilapidated properties in areas you have your eye on, and try spend some time online searching for sale websites with phrases like “taking all offers” or even “must sell”.
This might sound too good to be true, but they’re out there.
Profit Potential Source #2: Sheriff Listings
Sign up to the sheriff’s auction lists in the areas you want to get into.
In most cases this is free, and you can potentially get your next great deal delivered straight to your inbox!
Some even allow you to negotiate on a property before it goes on auction. This means no queues, no competition, and no more being outbid.
Naturally you’d want to drive past the property, or even try organise a way to get entry before the auction takes place. The last thing you want to do is nail down a deal you think is a solid one, only to find out it’s a black hole that just sucks your wallet dry.
Profit Potential Source #3: Network
It’s all about building a network. The more investors and property people you know, the more chances you have of being included in a lucrative deal or even have a deal fall into your lap.
Attend property events, socialize, get to know other investors. You might not want to give up your Tuesday evening on the couch, but it could very well mean the difference between you finding a great deal, or the deal finding a home in somebody else’s back pocket.
Get to know some of the fix and flip investors, and even real estate agents. There are tons of people out there who look to sell to rental property buyers, and most often they can point you in the direction of a ready-to-rent deal.
How The Financial Elite Grow Wealthy Through Real Estate
Once you’ve found your stride, it’s about systemizing that process and repeating it.
That’s how professional property investors make money.
When looking for a potential rental deal, always keep in mind the location, crunch the numbers, be cognitive of the rentability, and always make sure you’re buying a property that will appreciate in value.
Following on from that, to make sure the deal is right for you, research the area thoroughly, make sure you value the property correctly and run with the right price, keep an eye out for what your competitors are doing, and never ignore those hidden costs!
Lastly, if you’re looking for a way to find deals with the right potential, keep an eye out for distressed owners, get your name down on the numerous sheriff’s listings, and network network network!
Rental properties offer you a fantastic way to earn a passive income, so long as you know how to build and grow a rental property portfolio.
Learn the property process, and your strengths, and then rinse and repeat.
Until next time, be bold and go build that property portfolio.
Analyst, The SA Property Investor
The Money Lab
PS: Do you want to start investing in buy-to-let property, but just aren’t sure how to get started?
Then you need this simple, proven buy-to-let blueprint!
It's all in this FREE guide: