Blog Post

Growing Your Real Estate Portfolio with Two Different Approaches

Dustin Edwards • Jan 22, 2021

Explore How to Grow Your Rental Property Today

Row of Homes
When you own real estate one apparent aspect that becomes increasingly obvious is that growing your portfolio can take time. It takes time to reduce your loan balance, increase your rental income and ensure your property is properly maintained. Of course if you own a single unit there is only so much income you can generate...so how can you continue to grow your portfolio?

As the adage goes the answer is simple; it just isn’t easy. To help you grow your local rental property in Long Beach we invite you to consider two different approaches.
  
Grow Your Real Estate Portfolio with a HELOC
As your equity position increases with your rental property it can look great on the balance sheet, but if you can’t get access to that equity then it isn’t helping you to grow to greater financial freedom. To grow your real estate holdings here in Long Beach consider adding a HELOC to your rental to safely access some of that equity. Your HELOC can become the down payment for the new property and your tenant can help pay that off over time as they make their rental payments.

You might be thinking well a HELOC is a “Home Equity Line of Credit” and mine is a rental property will that even work? The short answer is that there are lenders who will provide you with a home equity line of credit on your rental portfolio. Traditionally there have been options available through the big banks (i.e. BofA) but there are also regional Banks that can help you with your HELOC needs. 

3 Tips for Successfully Using a HELOC to Grow Your Real Estate Portfolio
  • Check that the cash flow from your primary unit covers the new HELOC borrowed amount
  • Have cash as part of your personal reserve fund for repairs and/or vacancies
  • Identify a HELOC lender that can allow you to fix the rate

With HELOCs on rental properties you might not get access to as much of your equity as you would with your primary residence but you are merely accessing it to help you with a downpayment for the next unit.

Grow Your Portfolio with a 1031 Exchange
With real estate often providing large gains, due to appreciation and debt reduction one of the challenges is how do you grow while minimizing your tax implications? Minimizing your tax implications and growing your real estate portfolio can come down to using a 1031 exchange. After “location, location, location” one of the phrases in investment real estate is “defer, defer, defer”.

There are volumes of articles online about 1031 exchanges but here is the concept in a nutshell

  • The 1031 exchange name comes from the IRS code
  • A 1031 exchange allows you to defer your gain
  • A 1031 exchange can be a very tax efficient way to buy a larger asset (i.e. going from a 2 to a 4 unit)
  • 1031 exchanges have key time periods that must be followed

Politicians seem to be re-evaluating the 1031 exchange qualifications which means if you feel deferring a taxable gain to a later date could be advantageous then it just might be time to start getting going with this option. With a 1031 exchange being tax deferred (provided you followed all of the rules) we strongly recommend you speak with your accountant BEFORE you start the process to ensure that this approach puts you in the best position come tax time.

When it comes time to grow your rental portfolio (whether that be 2-4 units or through a 1031 exchange or HELOC) there are many items to consider. To help you determine what could be best for your property to empower tenants to rent for longer periods we invite you to call us today at (562) 888-0247. Or if you prefer a complete evaluation of your property we invite you to fill out our Free Rental Analysis.

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By Dustin Edwards 01 May, 2024
Everyone wants to feel safe in their homes. As an investment property owner, it's up to you to decide whether or not to include security measures in your property. Many of the costs associated with the security measures can be included in the rent, meaning not only can you keep your property safe, but you can earn more income in the long run. However, you would still want your tenants to have renters insurance to protect their assets. Today, we’ll discuss the top five security measures you can add to your property and why they're beneficial to you and your tenant. Security Cameras Cameras are probably one of the first security measures people think about when asked about security. Cameras provide more benefits than just surveillance. They provide an extra level of security for the safety of the tenants and their belongings. Additionally, security cameras can be useful when repairs are required. Cameras can aid in supervising repairs and maintenance to ensure you’re receiving the agreed-upon work. During vacancies when the property is empty, security cameras can help keep the property safe from potential intruders. Doorbell cameras are incredibly popular now. They provide the aforementioned safety of a camera that can be accessed remotely, as well as the ability to communicate with visitors. Although one must be careful never to say you're not home, just say you're unavailable to strangers. Security Lights Security lights with motion detectors are another effective tool when adding security measures to your property. These lights brightly if a potential intruder attempts to get near your home. They can provide enough illumination to see the intruder or, at the very least, scare them off. Nowadays, you can find a combination of security cameras and motion-activated security lights, such as the floodlight cam wired plus from Ring . Additionally, because these lights only turn on when motion is detected, they’re more cost-effective than traditional lights with a switch. Illuminate the Property Light generally deters intruders as it's more difficult to hide. Adding lighting to the landscaping can increase the security of the property while creating a relaxing atmosphere. Lights can also be used in other areas of the property to accent features such as trees, benches, or artwork. This can help your property stand out while giving your tenants an additional feeling of safety. Keyless Entry Keyless entry is seen as both a convenience feature and a security feature. They usually use an electronic passcode, biometric data, or grant access through a smartphone app. Physical keys can be lost, stolen, or duplicated. You reduce the risk of unauthorized entry by eliminating the need for a physical key to enter the property. Many keyless entry systems include several features, such as remote locking and monitoring. Although keyless entry is a great new technology for keeping your tenants and properties safe, they’re best used with other security systems. Security Company Nothing beats having an extra pair of eyes on your property for security. This is where security companies like ADT and SimpliSafe come in. While companies may deal with security in varying ways, they aim to protect your investment. While safety is the primary role of a security company, remember that many tenants may be willing to pay more for a premium amenity like a home security company. Keeping your property and tenants safe is incredibly important to the longevity of an investment property. If you’re looking to improve the security of your Long Beach rental property or need help managing your beach city rental property, we invite you to call us today at (562) 888-0247 or fill out our Owner Application online .
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