The first step to managing your property portfolio is deciding if you are ready for the responsibility. It takes a lot of time, effort and money to acquire plus maintain a property portfolio. Existing landlords and future investors must understand the difference between acquiring vs running a portfolio. If you intend to generate long term wealth and financial freedom, the management side of the business will over time become much more important than the acquisition cost. Using a strange analogy, owning a portfolio is like becoming a parent vs successfully raising a child. The former is closer to a 9-month sprint, and the latter is more comparable to a 30-year ultra-marathon.
How to choose
There are many factors to considerer before reaching the decision: What kind of properties? How much time can you devote? Do you have enough funds to build a portfolio? All these questions and others matter when considering whether or not someone will do well as an owner-manager. If this sounds like something you might want to try, then keep reading.
Why focus on a portfolio? A property portfolio is a group of properties acquired by an investor to rent for profit. You can buy and sell properties to create extra cash for the units you want to retain long-term. What you sell or flip is not part of the portfolio for this discussion. If you are in for the long term, you will pick differently. The type of property, the location and the required maintenance can vary a lot.
Self-management vs outsourcing?
Before you decide to self-manage, there are some things that you should consider. For instance, will you be able to find the time and focus for managing a property portfolio? If so, what type of properties do you have? How many properties do you currently own? Do you enjoy working with customer’s (long term tenants) versus being happier behind the scenes?
A few of the pros and cons
The elephant in the room is this: you lose out on the extra income available by having someone else manage your properties. Most newer investors automatically focus on the cost of property management. Pay now and receive benefits later.