How would you scale a rental property portfolio quickly?

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How would you scale a rental property portfolio quickly?


First…What I tell investors who have one or two rental properties and have primarily used their cash to fund the purchases, is that their money is the most expensive money they can use. When you tie up all or most of your capital into one or two deals you have effectively prevented yourself from securing anymore deals.

If you have little or no cash on hand and an opportunity presents itself, you will need to borrow money to secure this new opportunity and most lenders will not lend to you with little or no liquid capital in your accounts.

Leverage is the name of the game when scaling just about anything. If you have capital locked up in one or a few assets you should look into refinancing them to open up liquidity to secure the ability to leverage those funds into the purchase of several more assets.

Example: You can buy one house with $100,000 or you can buy 5 houses with 20% down and leverage the other 80% from a lender. The debt owed is mitigated by the cash flow of the property, the depreciation you can claim on taxes and the appreciation you earn tax free as the market improves and the property values rise.

Secondly, meet as many wholesalers as you can and take care of them. They will bring you deals that no one else is seeing and you can get great rental properties this way. Also, don’t be afraid to buy a rental that needs more than paint and carpet – evaluate the work needed and the monthly lease differential between doing the work or not, a lot of times its worth the work.

Categories: General Real Estate Questions, Rentals
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