If you inherited a piece of real estate or began renting out the home you once lived in yourself, you have likely noticed that this is an excellent way to earn consistent and recurring income as well as long term appreciation and equity.
Accidental landlords are uniquely positioned to begin building a strong real estate portfolio.
Let’s talk about how you can move from accidental landlord to savvy investor with the portfolio you’ve already begun.
Move Your Mindset from Unintentional Landlord to Strategic Investor
Accidental landlords often act in a way that’s reactive to whatever is happening with their rental or their tenants. If that sounds familiar, it’s time to shift away from responding to anticipating.
An investor’s mindset will help you make decisions that are beneficial now and in the long-term. It gets you thinking about your rental property like a business. Start tracking income and expenses, calculating cash flow, and analyzing return on investment (ROI). The goal is no longer to simply rent out a home. Now, you want to make each asset work for you.
Understand the Metrics That Matter
Pay attention to the following metrics and use good data to drive your decisions. Key metrics we encourage investors to watch include:
- Cap Rate. Net operating income divided by property value.
- Cash-on-Cash Return. Annual cash flow divided by the total cash invested.
- Occupancy Rate. Percentage of time your units are rented.
By understanding these numbers, you can better evaluate whether it’s the right time to buy, sell, or refinance.
Leverage Equity for Growth
Many accidental landlords sit on significant home equity without realizing its potential. If your current property has appreciated in value, consider refinancing or taking out a home equity line of credit (HELOC) to fund your next purchase. Using equity smartly allows you to scale without depleting your cash reserves.
Build a Professional Support Network
As your portfolio grows, so does the complexity of managing it. A team of professionals, particularly a good property manager, can help you make informed decisions and stay compliant. We can also free up your time, so you can focus on strategy rather than daily operations. Property managers will introduce you to other professionals who can help you grow a portfolio, such as lenders, insurance agents, brokers and agents, and insurance and legal professionals.
Choose the Right Properties
Not every rental is a good investment. Evaluate new opportunities based on location, tenant demand, appreciation potential, and operating costs. Look beyond single-family homes, too. Multifamily units, duplexes, and even short-term rentals can offer attractive returns if managed properly.
It’s a good time to plan for the longer term. Having a clear exit strategy is as important as acquiring properties. Will you sell after a certain appreciation? Transfer properties to a trust or heirs? Retire on the income? Define your financial goals and timeline so you can reverse-engineer your portfolio decisions.
Becoming a successful real estate investor doesn’t require a lot of experience. But you do need intention, education, and action. What started as an unplanned venture can become a powerful wealth-building tool if you take the time to learn and grow.
We can help you move from landlord to investor. Let’s make smart investments and enjoy a growing portfolio. Please contact us at Oceans Managing Group by calling (386) 255-8585, or visit www.oceanspropertymanagement.com.
