We love helping investors and property owners in the D.C. area grow their portfolios—but it's painful to see the effects of mistakes that could have been avoided. Sometimes, property owners come to us with a desire for more income—but they're trapped without knowing the way out of pitfalls that are derailing their success.
There's often a misconception that growing a portfolio means buying all the available D.C. rowhomes for rent to add to your holdings. While more properties are a critical component when developing a significant real estate portfolio, not every property is the right fit—or deserves a place with your existing properties.
How can real estate investors grow and sustain long-term profits in the D.C. rental market? Consider these insights from the professional property managers and association managers at EJF Real Estate Services.
Use Discretion With Wholesalers and Fix-Flip Investors
Everyone in the real estate business is out to make money—including you. From wholesalers to renovation teams, you'll deal with various people who want to profit from your properties as they help you find new rentals and get them rental-ready. To make sure you make money, it's critical to find the right partners that provide high-quality services and work with integrity.
Wholesaling is an excellent way to add more properties to your portfolio—but make sure you avoid wholesalers who inflate their pricing to make big money via unsuspecting investors. A wholesaler enters into a contract with a property owner, then finds an investor to take over the contract. They make money by raising the sale price on single-family homes, condos, and rowhomes, then taking the difference as their 'finder's fee.'
Investors need to understand how real estate wholesaling works—and partner with one who understands the best properties for your portfolio and helps you purchase at profit-generating prices.
A flipped rental home has already been through the renovation process. In ideal circumstances, you can find a property that's rental-ready and perfect for your portfolio. This allows investors to skip the renovation process and generate income faster when purchasing a new property. However, it's crucial to understand that not every renovated property will have amenities and features that make it an ideal rental property.
- As with wholesalers, find fix-and-flip investors who understand the D.C. rental market.
- You don't want to overpay for flipped properties that don't meet the needs of local renters.
- Research any properties that have been through a fix-and-flip process to make sure they will become ideal D.C. rowhomes for rent.
New Builds Can Be Ideal
At EJF Real Estate Services, we have noticed an emerging trend of newly-constructed homes that target the renting population. Portfolio growth doesn't have to depend on finding older homes in the D.C. area, renovating them, and then making them available to renters. Choosing new builds can add rental-ready homes to your portfolio—without the work or budget required for fixes.
From condos to rowhomes and single-family homes, new construction in renter-friendly communities can be an excellent way to build your portfolio with properties in prime locations—and with the amenities D.C. renters want most. Plus, with new construction, properties won't need significant repairs or replacements for some time. This can lead to incredible savings compared to what you might have to spend on frequent repairs to an older home.
Manage Your Costs
Sometimes being a rental property owner can feel like you're always paying for something. From ongoing maintenance and repairs to taxes, insurance premiums, and community fees, real estate investing can seem like you're continually paying invoices and vendors.
Are you keeping track of those costs? If you're writing more checks than your cash flow can handle, you could be building a portfolio that's not generating any net income. Budgeting can be one of the most challenging aspects of being a successful real estate investor. EJF Real Estate Services helps investors get a handle on costs to make sure their D.C. rowhomes for rent yield more profit.
Before buying a new rental property:
- Identify whether you are overpaying for certain services.
- Make sure you have the cash flow to cover start-up costs for a new rental.
- Confirm that the rental property will generate income based on the estimated monthly rent.
- Ensure you have processes and property management services in place to accelerate your growth rate.
Routinely reviewing financial reports is a critical part of success in real estate. Watching the numbers and understanding each property's performance helps investors know when it's time to add a new property in the D.C. rental market. You'll also know when it's time to raise the rent on a property or look for better pricing on specific services when you encounter maintenance issues.
You don't have to do any of this alone. Remember: the right partners help you get the most out of your growing portfolio.
Hire Professional Property Management, D.C. Investors
The first partner you need for success is a professional D.C. property management company, ideally one with experience in navigating the complexity of community associations as well. Associations are a part of life in the D.C. area, so your property manager will only be successful if they understand this facet of real estate.
Investors can rely on the expertise of the right full-service property management firm to help them find better properties, choose the right real estate wholesaling partners, and manage costs versus income.
EJF Real Estate Services has the rental market experience investors need for successful portfolio growth. Our decades of high-quality service in our nation's capital helps real estate investors grow intelligently to meet their financial goals. We even guarantee your happiness with our property management services.
You can learn more about the benefits of such a partnership when you download our complimentary Real Estate Investing Guide.