How To Buy Multiple Rental Properties in Today’s Market

Rental properties are a hands-on business, and you are ready to get your hands dirty and jump in. Investing in real estate can bring passive income into your life, generating diverse income streams while building wealth over time.

A steady monthly cash flow from rentals can be a profitable business oppotunity.

Growing your real estate portfolio involves making a lot of important decisions. To make the right decisions, it’s important that you:

• Gain knowledge on the different types of properties available
• Understand the local market
• Know how the properties will financially impact your life. 

Continue reading as we discuss the benefits and my top tips for purchasing rental properties successfully.

Table of Contents

• Is Having Multiple Properties a Good Investment?
• 3 Benefits of Owning Multiple Rental Properties
• 5 Tips for Buying Multiple Rental Properties
• PEGGY HOAG REAL#how-to-buy-multiple-rental-properties-4 ESTATE — Your One-Stop Shop for Multiple Rental Properties

Is Having Multiple Properties a Good Investment?

Purchasing multiple rental properties can be a profitable investment opportunity. The more rental properties you own, the greater your potential for long-term return on investment (ROI). Your overall income, along with the appreciation over time, can generate wealth. 

Owning rental properties is one way to acquire wealth and can be a valuable long-term investment. 

Let’s look at how it works:

If you buy a $300K piece of real estate and can put 25-30% down and get a tenant, the tenant pays your mortgage each month — potentially until it’s paid off. From that moment on, you would have passive income each month on the property you own, free and clear. 

If you take the above formula and invest in 10 properties, and you charge $3000 per month for rent for each one, that’s $30K per month coming in, plus you own the properties. You won’t make that kind of money in the stock market.

So if you invested $90,000 as a downpayment in a home 20 years ago and then your renters paid the mortgage, that house may be worth $1 million now. Since you no longer have to make payments (besides taxes, upkeep, etc.), you are making money each month. In addition, you also have the option of selling it at a significant profit.

The market is competitive, especially in the greater Portland/Vancouver/Columbia Gorge areas, and rental properties are a hot commodity. PEGGY HOAG REAL ESTATE has the knowledge and experience to help you make an educated decision. Call us today at 503.906.1370 to learn more.

3 Benefits of Owning Multiple Rental Properties

#1: There Are Tax Benefits

The tax laws in the USA benefit real estate investors. For example, tax write-offs can help balance your expenses. 

According to the IRS, if you own rental properties, you may deduct the following expenses on your tax return:

• Mortgage interest
  • This interest can be considered a business expense.
• Depreciation  
  • Because of Publication 946, How to Depreciate Property, when your rental property depreciated over 27.5 years, a property (not including the land) worth $150,000 could allow you to deduct $5,455 every year, meaning that you reduce your taxable net income. 
  • Depreciation expense deductions increase with the more properties you rent; therefore, they could help you end up in a lower tax bracket
• Expenses concerning the maintenance and management of the property
  • Repair expenses, such as supplies and materials, may be deducted as they are necessary to allow the rental to operate in good condition.
  • You may also deduct advertising, utility, and insurance costs.

It is important to note that improvement costs are not deductible as this is recovered through depreciation. 

#2: Diversification Minimizes Risk

Diversification reduces risk by spreading out investments to minimize losses.

Investopedia shares that diversification is an essential factor in reaching long-term financial goals. Investing in various properties is an example of diversification. 

Real estate trends shift — hotspots change. Nowadays, we see many people looking to move to places where the cost of living is lower. When investing in real estate, you may decide that investing in multiple locations in the same city might not be the most lucrative strategy.

#3: Offers Access to Varied Income Streams

Purchasing various properties to rent out creates multiple income streams. 

The objective is to earn from the tenant the money needed to pay the:

• Mortgage
• Taxes
• Bills
• Maintenance
• Upkeep costs

You can make money in several ways with real estate, including the following:

• Rent payments from tenants
• Appreciation in market price
• Increasing value with additional revenue streams

The goal is to increase your financial security. The more properties you own, the more opportunities you have to increase your earnings.

5 Tips for Buying Multiple Rental Properties

#1: Scout Out Rental Property Locations

One of my top tips is to buy in a location with a high need for rentals. Buy in a nice mid-range where employed tenants can make the payments. You never want to buy the cheapest properties.

PEGGY HOAG REAL ESTATE, licensed in Oregon and Washington, is a luxury real estate broker who has been helping clients for 30+ years. 

Are you interested in high-end real estate? 

PEGGY HOAF REAL ESTATE specializes in helping clients find:

• Homes with spectacular views
• Large, spacious properties
• Luxurious vineyards

 #2: Consider Different Property Types

How many rental properties are profitable? 

Research the different types of properties to decide which will be the most beneficial. 

Before purchasing multiple properties, you must understand what you can afford. Even though your goal is to have your tenants pay the mortgage payments and costs of your investment, there may be situations where you need to cover the costs.  

If your property isn’t rented for a month or two, will you be able to support the expenses? 

It is possible to experience a negative cash flow on a property for a few months due to not securing the right tenant or having to make some repairs. In this case, having another property with positive cash flow may sustain you through tough times.

There are many types of properties you can invest in to help diversify your portfolio: 

• Residential
  • Single family homes
  • Condos
  • Apartment complexes
  • Turnkey properties 
  • Multi-family residences
  • Vacation rental properties
  • Townhouses
  • Duplexes
• Commercial
  • Offices
  • Retail stores
  • Factories and warehouses
  • Healthcare facilities
  • Leisure buildings
• Industrial
  • Factories
  • Laboratories
  • Distribution centers
• Land
  • Agricultural land
  • Undeveloped property
  • Vacant lot

#3: Evaluate the Rental Properties’ Financial Projections

Analyze the rental market. A property investment calculator can help you with this task. 

Never buy a property on the spur of the moment. These transactions take time and plenty of research to ensure you are making the right decision. 

Ensure that your expenses never exceed revenue by creating a cash flow projection. A positive cash flow each month will give you money for any future issues involving finding new tenants and dealing with repairs, upgrades, or renovations. 

When evaluating rental properties, you can evaluate using these metrics:

• Net Operating Income (NOI)
• Capitalization (Cap) Rate
• Gross Rent Multiplier (GRM)
• Loan to Value (LTV) Ratio
• Operating Expense Ratio (OER)
• Occupancy Ratio

#4: Explore Financing for Multiple Properties

The interest rate is a bit higher for non-owner occupied financing and you also typically have to make a higher down payment (instead of 10-20%, it may be 20-30%). Banks or lending institutions will immediately let you know if you qualify. 

In addition, to finance one to six rental properties, Fannie Mae’s standards say you need a minimum credit score of 720.

#5: Plan for Multiple Rental Property Management

You may choose to be the property manager for your rentals, but depending on the number of properties you have, it might be best to bring in a management company.

As a family-owned and operated company, PEGGY HOAG REAL ESTATE has been a real estate industry member since 1991 and can help you manage your properties. 

You will no longer be woken up in the middle of the night because of tenant emergencies when you hire PEGGY HOAG REAL ESTATE to manage your properties.

PEGGY HOAG REAL ESTATE — Your One-Stop Shop for Multiple Rental Properties

Are you still trying to figure out how to own multiple rental properties?

PEGGY HOAG REAL ESTATE can help you buy AND manage properties. We have 3-+ years of experience when it comes to pricing, marketing, and leasing. 

Our services help you: 

• Minimize liability 
• Avoid the mistake of under-renting your investment property
• Reduce maintenance costs

Even if you are just starting to create multiple streams of income in real estate, you don’t have to start from ground zero. With PEGGY HOAG REAL ESTATE, you get 30 years of experience when we join your team. 

Get the support you need to skyrocket into a successful future as a real estate investor.. 

Reach out today to learn more. We are excited to help you thrive. Call 503-906-1370.