How to Build a Real Estate Portfolio

A robust real estate portfolio remains essential for serious investors. The holdings in a real estate portfolio can range from condominiums and apartments to single-family houses that gain value over time. It is important for potential owners to learn where they can find value real estate as well as how they can get better returns on their portfolio.

Things You'll Need

• Local and state maps

Instructions

1. Generate local and regional maps that track property values before you build a real estate portfolio. Place Post-It notes by each target for your real estate investments with current values, as well as historical trends, to guide your portfolio-building choices.

2. Create your own process for calculating the costs and potential return on prospective real estate investments. Your real estate formula should account for generous investments in contracting, listing fees, property taxes and maintenance.

3. Search for homes, condominiums and apartments that require little maintenance during your ownership. The best properties for value investors do not have large lawns, gardens and other elements that require costly attention from contractors.

4. Reduce liability and maintenance issues on your property by steering clear of houses with tennis courts and swimming pools. These amenities may seem attractive on a Realtor's sheet, but they can be a headache for an investor who is building a long-term portfolio.

5. Journey into neighborhoods and communities with high property values to find houses that may be selling under market value. A real estate investor may be able to find an unkempt or undersized house in a nice neighborhood that has a potentially high sale price.

6. Search for empty land zoned for residential and commercial land that rests on the edge of current developments. These properties will grow in value over several years as builders and local officials search for additional space to create new developments.

7. Cultivate solid relationships with roofers and contractors in your community that are looking for steady work. These relationships allow a real estate investor to find quality workers for every project while helping honest contractors make a good living.

8. Reside on a high-value property in your real estate portfolio for at least two years before selling to avoid capital gains taxes. The IRS allows a single investor to avoid capital gains taxes by residing in a house worth up to $250,000 for at least two years.

9. Stage every home and apartment in your real estate portfolio several months ahead of listing to create a lived-in atmosphere. Find inexpensive furniture, paintings and accessories for residential properties that convince buyers that these homes are ideal for their families.

Tips & Warnings

• Aim for reasonable profits as you clear land and homes from your real estate portfolio. Real estate investors should expect between 10 percent and 20 percent profit after paying for maintenance, advertising and listing prices on each of their prices.

• Contact homeowners who are heading toward foreclosure procedures directly to bolster your real estate portfolio. These homeowners may be willing to sell their properties or rework their mortgages to real estate investors in order to avoid legal procedures.

• Steer clear of a reputation as a bottom feeder by diversifying your real estate portfolio. Experienced Realtors and buyers will steer clear of sellers who are known for putting low-end properties on the market while holding onto high-value properties for years.

Resources

• Zillow.com property value guide
• BestContractors.com