How to Build Real Estate Portfolio: Tips for Success

Photo of author
Written By Justin McGill

DealBloom aims to share the latest tips and strategies to help realtors, brokers, loan officers, and investors navigate the world of real estate.

When it comes to how to build real estate portfolio, there is no one-size-fits-all approach. What works for one person may not work for another. However, some general tips can help you get started and be successful in growing your portfolio.

The first step in how to build real estate portfolio is research. Learn the different types of investments available and how they work. This will allow you to make informed decisions about where to put your money and avoid making costly mistakes.

Another key tip is to start small and gradually increase your investment as you become more comfortable with the process. It’s also important to diversify your holdings by investing in different types of property (e.g., residential, commercial, industrial) located in different areas so that you spread out the risk involved.

How to Build Real Estate Portfolio

Should investors build a portfolio of properties?

With something for every investor, there are several ways to invest in a rental property. For those looking to grow their rental investments into multiple properties, the first step is learning how to build a portfolio of rental properties.

A real estate portfolio is a collection of different investments that are held and managed by a real estate investor to earn monetary returns.

A portfolio of past and current real estate investments may include rental properties, REITs, and rehabs.

While not every investment portfolio will be the same, the assets included will generally depend on the investment objectives, timeline, and risk tolerance of the investor.

When creating a real estate investment portfolio, it is important for investors to first consider how long they plan on investing and what level of risk they are willing to take on to achieve their desired goal.

Because there is always a chance that you will lose some or all of your investment, it’s important to understand your risk tolerance and only invest as much as you’re comfortable with. Only you can determine how much of an investment you’re willing to lose.

A real estate investment portfolio is just what it sounds like: a collection of assets owned by an individual or group.

These portfolios represent the investor’s career-long achievements and show their accomplishments in the field.

Portfolios are like a résumé, but there’s more to them than just listing your achievements.

For those considering starting a real estate investment business, here’s how to get started.

Benefits of Building a Real Estate Investment Portfolio

There are a variety of reasons why building a portfolio of rental properties can be advantageous, including the ability to build wealth, diversify investments, and generate income.

Passive income is money that you earn without having to work for it. This can come in many forms, including real estate.

Adding a rental property to your portfolio can provide you with a steady stream of passive income that can be used to pay down the mortgage debt associated with the property. In addition, over time, the value of your rental properties may appreciate, providing you with additional protection against inflation.

Properties in your portfolio can rise in value over time, helping to protect you from the effects of inflation.

Building a real estate investment portfolio offers many benefits, including the ability to diversify your risk and have more control over your investments. Additionally, owning rental property comes with several tax benefits that can save you money.

Most costs associated with owning a house are tax deductible, and if you keep good records, you can deduct some costs.

Generally, you can claim the deductions for the year in which you paid for these common expenses:

  • Advertising
  • Cleaning and maintenance
  • Commissions paid to rental agents
  • Homeowner association (HOA) fees or condo dues
  • Insurance premiums
  • Legal fees
  • Mortgage interest
  • Taxes
  • Utilities

While a long-term hold can be lucrative, it also requires a lot of work. You have to keep your tenants happy, your property well-maintained, and your costs low.

To handle repairs and regular maintenance, you need to have money set aside. And, you need to put in the time to find good renters.

As nice as owning a rental property can be, an eviction can make you forget all of the good times.

Most investors don’t want to tie up their funds in a 30-year loan. Instead, they prefer shorter-term loans.

The bottom line is that even if you don’t pay off the mortgage, holding a property for the long term is still a good investment. You can do things to reduce the amount of time it takes to own the property outright, but even those methods will only save you 5-7 years.

In the end, owning a property for the long term is still a wise investment decision.

Assuming you have been investing in real estate for 10 years, you have likely built up a good amount of equity. Additionally, you have probably received some great tax benefits and cash flow from your investments.

How to Measure the Success of a Real Estate Portfolio

After you’ve compiled your investment portfolio, you can work with a professional investment management team. Alternatively, you can calculate your own success.

A professional financial advisor can help you measure the success of your real estate portfolio in several ways. They will be able to audit your current investments, make recommendations for future opportunities, and manage your holdings over time. However, these services do come at a price.

Investors often prefer to manage their portfolios themselves. The key is to add the correct metrics and compare them over long periods.

  • Net Cash Flow: Every investor should know the net cash flows of their properties. It is the annual net income of an investment minus its annual expenses.
  • Cash-on-Cash Returns: Divide net cash flow by your starting capital to get your cash on cash return. This can help you make comparisons between different investment opportunities.
  • Economic Vacancy Rate: The formula for calculating your vacancy is the number of vacant units x 100 / number of total units. This can help you determine how your vacancies compare to others in your area, and when it might be time to raise the rent.
  • Property Appreciation: Track the property values of your properties over an extended period. This will help you assess how your investments are performing.

Growing Your Real Estate Portfolio

Acquiring a real estate portfolio of your own will take time.

Instead, it is something built gradually and methodically.

Learning to leverage your real estate portfolio is key to growing your business.

For example, you can leverage your collection of assets to establish your credibility when trying to close new deals.

Diversifying your investments is another way to mitigate your risks. This can be accomplished through a variety of ways, including investing in different asset classes, such as stocks, bonds, and real estate.

While investing in stocks can be risky, the real estate market is generally seen as less volatile. However, no market is completely risk-free.

By investing in multiple properties, you spread your risks by owning different types of real estate. Here are a few ways you can diversify your investments:

  • Commercial Real Estate: The commercial property market is often thought of as the next logical step after an investor acquires a few residential properties. This is because not only do commercial rentals have larger profits, but they also help to diversify your portfolio. These include office space, retail locations, and industrial warehouses.
  • Multifamily Properties: Investing your capital in multi-family housing can be a great way to diversify your investment portfolio. By investing in multiple markets, you can protect yourself from market conditions that can affect single-family home investments.
  • Real Estate Investment Trusts (REITs): Real Estate Investment Trusts are a type of investment that allows an investor to invest in property without actually owning it. Instead, they invest in shares of a trust, which invests in properties and pays out dividends. This is a great way to diversify your portfolio without sacrificing your focus on real estate investments.
  • Raw Land: Investing in undeveloped property is becoming a popular strategy for many successful real estate entrepreneurs. Buying vacant land and dividing it up for reselling, leasing it to tenants, developing it, or holding onto it while it increases in value are all ways to utilize this investment. Because it offers so many different ways to make money, investing in raw, unimproved property is a fantastic way to diversify your portfolio.

To grow your investment portfolio, it’s important to know what common mistakes you should avoid.

Some of these common mistakes include not diversifying your investments, not conducting your due diligence, not accounting for all expenses, or working with the wrong professionals.

As an entrepreneur, one of the keys to success in real estate is creating efficient systems that allow you to achieve economies of scale.

Growing a real estate investment business can be a lot of work, but once it is up and running, it will start to work for you.

If you’re looking to grow your business and attract new clients, a portfolio is a great way to showcase your work. Having a well-designed, professional-looking portfolio of your past projects can help attract more business while you’re sleeping!

By spreading your investments out, you can minimize the risk of losing money if the market fluctuates. Diversifying your investments will help ensure that you always have a steady income coming in.

You can invest across different regions, different types of property, or in real estate investment trusts (REITs).

Real estate analytics are an important component of any investment portfolio because they are a quantifiable tool that can measure the success or failure of various real estate investments.

A few key metrics that real estate investors use to evaluate a property are the cap rate and cash on cash return. A real estate investment tool like a rental or investment property calculator can quickly calculate these for you.

Recording your real estate investments is essential. By tracking your progress, you can make sure that you are making the most out of your investments.

Real estate analytics can provide key insights for a variety of reasons. Not only will this information be requested by potential lenders, but it can also help you determine if a new property is worth pursuing. By having a system in place to track and record these numbers, you can more easily make informed decisions about your real estate portfolio.

A great way to improve your analysis is to keep track of all the numbers you gather. You can create a spreadsheet where you can record the comps, the offers, and your analysis of each property.

As you build your portfolio, it’s critical that you find a system that is easy to navigate. Using tracking and analytics software is the best way to monitor and optimize your investments. This will help you make informed decisions about future investments.

As you start to build out your portfolio, there may come a time when the tasks you have to complete are too much for you alone. This is the perfect time to start building a team of people you can trust.

As an entrepreneur, it’s crucial to always expand your team. Hire new team members to delegate tasks. But, you must take the time to find individuals who share your mission and vision before assigning them any duties.

One of the best ways to free up your time as an investor is to hire a virtual assistant. You can delegate tasks like website management and marketing campaign tracking to them, which will free up valuable time in your day.

Hiring an accountant is a great way to keep your taxes and finances in order as your business grows. They will be able to manage everything for you so that nothing falls through the cracks. This can be a huge help, especially during tax season.

Start by listing the tasks that take up the most time in your investing business and are the most difficult for you. Then, start there when building your team.


Learning how to build real estate portfolio can be a great way to secure your financial future, but it’s important to do your research and start small. By following these tips, you’ll be on your way to success. And don’t forget – always consult with a professional before making any major investment decisions.

Justin McGill