Property has long been translated to power in our culture. Many young entrepreneurs are quite enthusiastic to enter the field of real estate. Moreover there are many established businessmen who put some of their eggs into the basket of real estate. It is highly attractive for young investors in particular to be overwhelmed by the idea of owning multiple properties. Many individuals looking to invest in real estate will haste in their investments and invest in multiple properties with success; however it doesn’t mean it is the right path for you.
There’s always two sides to a coin. It is true that many successful real estate investors are managing multiple properties with high success; it might not yield the same results for you. People are quick to buy into the perception that more is better when it comes to real estate however it is not true. This article will take you through the ups and downs of investing in multiple properties at once.
Advantages of Investment in Multiple properties at once:
Stability in investments:
Take the example of a person who take one deal at a time; this person will be more concentrated on the task at hand; however in case they fail to close this one deal; the profits they were able to make on this are now completely removed. This can lead to a state where you are unable to make sufficient money within a required span of time. A quick fix suggestion to this would be having a rental property; which provides a monthly rental income as a sure way of generating finances. However even with rentals it is not so simple. Many times due to newer projects opening up alongside and the market situation fluctuating the rental may become vacant. Moreover after the vacancy due to the aforementioned reasons; the public might loose interest in this project and vacancy can become the norm for this rental property. The value of rent might be depreciated quite significantly and might not make the ends meet.
All of the problems mentioned above can be greatly tackled by the fixture of having multiple properties at once. With multiple properties even if you fail to sell one at an appreciated value for profits; you might have a few others spread out throughout the town that gather a lot more public interest than you initially thought of. If de to some unforeseen circumstance one of the properties depreciates, you still have your other properties as backup. Same is the case for rentals. If you rental in one area is losing tenants and public interest; the other properties will be able to make up for the loss from one of them.
greater income:
A single property on the real estate market can only provide so much from its benefits. You might have a single rental property whose rent might fluctuate according to the market situation. Similar buying and selling a single property at a time can generate so much. On the other hand for an investor who has spread out their investments over a few properties will be getting more income from the multiple deals they are signing on the market. In case the person owns multiple rentals; the added rental income is much better in comparison to something that comes from a single property. You are naturally generating more just by investing in ore properties. This is completely to your advantage in the real estate industry.
Experience and learning:
Another major advantage of investing in multiple properties at once is that you gain a lot more experience in shorter spans of time than a person dealing with a single property at time would be able to. by spreading out your investments over multiple properties you are able to get a gist of how each property is viewed on the market independently. A person owning and dealing a single property at a time might be more focused on its details; but the person dealing with multiple ones is able to learn quicker about a different set of properties.
Same would be the case for rental properties. You might get a really good tenant on the single property that you own; however it might not be beneficial for you in the long run. There is nothing more blissful for a landlord to get a tenant that they understand and the ones that entirely comply with their demands, however it get be shocking once you get a new one that doesn’t ideally fit on your criteria. For the person dealing with multiple rental properties will have a better idea on how to manage tenants and they can get a lot of experience in dealing with people this way.
Knowledge and negotiation are both very important elements for success on the real estate market; both of which can be found by investing in multiple properties at once.
Cons:
Bigger financial investment:
This is one of the major obstacles to get into investment in multiple properties at once. You might be able to generate finances and savings to buy yourself a single property however buying multiple at the same time is not something that is easy. You have to have a strong financial backing before trying to invest into multiple properties at once, not something everyone can afford.
Even if you are able to invest into the multiple properties at once; the high risk, high reward applies here! It is never guaranteed that you will be generating guaranteed profits in real estate; that is why in case of if a single investment fails; you can recover however if multiple investments fail; the financial blow can be significant to your situation in the long run.
The easiest solution is to invest in properties that are spread out over a few different parts of a city. For example if you live and want to invest in the twin cities, then go for a property in dha and the other in Bahria town, if you can afford more try to aim for properties in ghouri town and other settlements so that market situation affecting properties regarding a particular settlement will not depreciate your other properties all at once. Spreading out your properties over different cities is also a valid solution however not as easy to follow through with as it may seem on the first glance!
Another solution to the higher investment price is looking towards low priced properties. There are property projects that are built with the intention of being cheaper than their luxury counterparts and attract market attention as well. Moreover buying properties in newer investments (which also comes with its own set of pros and cons) can be considered as these under development properties are significantly low priced. Moreover some of the low cost properties can drastically appreciate in their values down the lane of a few years. Due to this appreciation rate; the practice of buying low cost properties in under development areas is highly popular on the market.
Difficulty in management:
Another one of the major disadvantages of owning multiple properties at once is the difficulty in management. A single property or rental will require a shorter span of attention towards its management and dealing. On the other hand a person who is investing in multiple properties at once will be too entangled and busied by managing all of these at once.
Management and planning is key to success in real estate business however it becomes significantly more difficult once the matter is of handling multiple properties at once. This is why it is preferred to hire professionals for addition help to manage your investments. Many successful real estate investors have hired real estate agents and managers to help them deal with their properties. This takes the burden of workload off of them and helps investors to be able to enjoy their lives alongside their business work.
Same would be applied to rental properties where being bothered by constant reminders and complaints of tenants can be quite draining for a single landlord to manage.
Conclusion:
Buying properties in batches is a highly attractive vision for many individuals who enter the field of real estate. However it is easier said than done. Meanwhile the benefits of having higher returns on investments and steadier cash flow as compared to handling single properties as well as financial stability is present in investment of multiple properties at once; it might not be for you!
Owning multiple properties at once can also mean a bigger risk for the rewards you aim to reap; the entry price of investment is significantly higher and the management can be troublesome for you to handle. However these cons can be eradicated by smartly spreading out your investments and hiring professionals to help you with your real estate matters if things seem like they are going out of hand.
