Buying an investment property is one of the best decisions you can make. But you may wonder, “How can I do it well?” or “How can I build a superior real estate portfolio?” Here are 5 tips for creating a superior real estate portfolio in Omaha!
Lots of people want to get into real estate investing but the process can seem overwhelming, stopping from them from ever making the leap. Many will take expensive seminars and never apply what they learned. But once you get started, the process of building your portfolio gets easier with each acquisition. Equity and experience create a compounding momentum that can generate a portfolio of cash flowing investments. Keep reading to learn just a few of our tips for building your Omaha real estate portfolio!
1| Be Financially Prepared
As you consider investing, it’s important to understand your potential risks and their associated costs. A lot can happen when you own investment property and little of it will be expected. Plan and be prepared for repairs, tenant turnover, taxes, maintenance costs, and all the other costs that arise as a homeowner. Well-maintained properties avoid some of the larger repair costs down the road but require cash for investment. As you prepare to buy real estate in Omaha, always consider the worst-case scenario. Of course, the goal is to have low-maintenance, profit-producing properties. But if this shouldn’t happen, you want to be ok if you should have to sell the property at a loss before moving on to your next investment.
2| Have The Right Team
Your success will be largely determined by the team you surround yourself with. There are many different people you will work with on your investment journey. Building strong, loyal relationships will provide mutual benefits, increase your profits, and help you to save time. Some investors have teams of 30+ people to help them succeed. When building your real estate investment portfolio in Omaha, you’ll want to build a team of star players. You’ll want honest and hard-working contractors who can help you to quickly fix up a property. You’ll need a title company, agent, wholesaler, accountant, and lawyer on your team who can help you with any questions or hurdles you run into along the way.
3| Build An Engine for Steady Growth
Solid real estate portfolios in Omaha (or in any city) show strong, steady growth over time. Set out your goals, build a plan to reach them, and be flexible as things change. But remember that fools rush in. Buying properties to quickly is risky. Adding to your portfolio before you stabilize your last acquisition is risky. If funds limit your progress, it’s easier to go slow, but harder to keep sufficient reserves. The goal is to set up your system to add properties as you are able to safely acquire them. Nothing beats on the job training, but you’ll find lots of books and online resources to help you along the way. If your growth engine works well, you’ll soon be looking to expand into larger and potentially more profitable properties.
4| Identify a Niche
There is a multitude of approaches to real estate investing and you can’t possibly master them all. Many types of investing require unique knowledge to be successful, like golf courses, mobile home parks, and large apartment complexes. We’ll talk about diversity shortly, but there is a huge advantage to developing your skills in one area at a time. Try to become a specialist with one type of investment. Over time, you can add other types to your portfolio. Just as important, you’ll have a hard time succeeding if you do the same thing as everyone else. If everyone is wholesaling, consider Section 8 rentals or mobile homes. Be careful of trends though. People will say “everyone” is downsizing or looking for tiny homes, but do your research. Many of these trends will not last. Finding your ” unique thing” can set you apart from other investors and allow you to find deals that others would miss.
5| Diversify Your Investments
As important as it is to focus on a niche area of real estate investing, there are two downsides. First, you may need to experience different areas to find your niche. Second, you may need to respond to great deals outside that niche to get started. And third, a single niche focuses your risk and makes your portfolio more susceptible to market changes. Once you’ve built a basis for your portfolio (perhaps 10%-30% of your goal), it’s time to focus on diversification. An ideal real estate portfolio in Omaha will often have a blend of residential rental properties, commercial properties, raw land, mobile homes, REITs, and even properties that are quickly being flipped. You don’t need or want to own a little of everything, but its good to include a few types of real estate investment in your portfolio to lower your risk. You should also consider diversifying your markets. Some cities weather downturns better than others. Keeping less than 20% in any market will reduce your exposure.
Building a real estate portfolio in Omaha can be an extremely beneficial investment decision. By keeping yourself in the know, working with the right people, and learning as much as you can about the business, you will be able to create a portfolio of cash-flowing investments that will benefit you and your family for years to come.
