Scaling Your Portfolio: Strategies For Real Estate Investments
You’ve no doubt seen the common thread through many of our blogs—our greatest strengths come from the connections we have made. This is especially true when building your real estate investments portfolio. The right realtors will help their investors connect with the areas they want to invest in. They are familiar with local neighborhoods and are willing to do the research to find the best properties to fit their clients’ needs.
Imagine someone with me. Let’s say we have a business-savvy person who has been in the automobile industry for the last few years. Their business has grown, and their success in their own sector has them ready and eager to expand their investment portfolio. Specifically, they want to expand their portfolio with land and, pun intended, park their money in real estate to maximize its growth potential.
There Are A Number Of Ways You Could Proceed With Expanding Your Investment Portfolio
Short-Term or Long-Term Rental Investments
The simplest way to get started is to find a move-in ready home or condo. These properties can then be used as both short-term or long-term rentals. With the current high rates, finding properties that will break even in this market is hard. If you are ready to have a negative cash flow for a time, refinancing or other growth opportunities may arise in the next few years.
Commercial Real Estate Investments
Or maybe commercial real estate is where it is for our would-be investor. While not super sexy, commercial real estate is a safer investment. However, it does take a lot of money to get started. Commercial property, while safe, can also be more of a waiting game. These properties can generate 5-6% annually, and long-term investments can be tax-efficient. There is always the chance that someone else may come to you with an offer for the property for their own business or development, which can result in higher return opportunities.
Real Estate Development Investments
The third, and by far our favorite projects to participate in, are real estate development investments. These projects involve higher taxes, short-term capital gains vs. long-term rates, and all, but the potential for earning far outweighs commercial and turn-key investments. Return rates on development properties can yield a 30-40% profit increase, even with the higher tax rates.
This is where the right partners come in. For our business-person looking to diversify their portfolio outside of their comfort zone, partnering with experts and connected realtors in the areas they are looking to invest in will help them make the right financial choices.
What Kind of Opportunities Have You Seen vs. What Do We Offer?
Naples Relocation Experts is directly connected with our community, and we have seen all sorts of investments in our time. We craft each investment for our individual clients. Here are a couple of examples of what that looks like from some of our recent client interactions
Example 1
We recently had a client who was looking for a turn-key investment. He purchased a newer condo with the intent to rent annually or seasonally. The condo included a highly sought-after golf membership with the deed, ensuring it would be easy to rent. The client sees this property as a five-year holding project that will make a decent return. When the five-year term is up, and it is time for a new coat of paint or new appliances, the client can refinance or cash out and find a new investment opportunity. In Naples Park, a brand new home may rent for close to $30,000 in season or $1000/night for something like a three-bedroom home, which can work out to be less than the hotels worth staying in and all but guarantee occupancy. I like this play personally because new properties like this often still come under warranty, and the amenities all but ensure that there will be capital growth. It is an easy way to earn passively as you just put someone in there, and your work is done.
Example Two
We have seen a growth in the need for “car condos” in the last few years. This has led to more “parking lot” properties specifically aimed at owners of high-performance and classic vehicles. Properties around Naples may have a 2-3 car garage that works for the day-to-day drivers, but certainly not the car enthusiast with a growing collection. This out-of-the-box thinking is what makes our line of work exciting and is precisely the sort of creativity you want in an investment partner or realtor.
Example Three
Like I said earlier, our favorite sort of project to take on lies directly in development. And more so in development that goes far past the cheapened term “luxury” and into a space of opulence and bespoke creativity. This can be a very niche market, but it is the most fun to work in and has the highest opportunity for returns. These spaces require you to work on the highest levels, utilizing your connections and leveling up the investment game. Everyone involved works together, and everyone wins together. We recently met with a client looking for one such property. The client was looking at the ballpark of $10 million for just the land. So we reached out through our realtor connections, who work regularly in these parameters, and they found a waterfront space with plenty of room to get creative. Spaces like these let us stretch our chops, and the little details that go into a project like this make it fun. Puzzle pieces like: Who is the right designer? Who is the right architect? How do we situate the lot? These are the sorts of properties that resell far above the initial investment price and leave everyone involved beyond happy.
How have clients and partners (other realtors) successfully leveraged your network to access properties or find vendors?
Whenever we work with someone, it expands our network, and we like to return the favor. Recently, we had a property on Alamanda Drive, and we had a friend help us with the remodel layout. It was a simple job that did not require an actual architect, even though we needed to raise the ceiling. So when the friend we hired for that project reached out to us with a similar project, we connected him with our contacts and cost information for his similar remodel. Again, it all boils down to connection and helping each other out so we can all win.
Our Four Step Process For Real Estate Investments
We have a flexible four-step process for working with a client.
Step One: Consultation
We all sit down and get to know each other. We find out what the client wants and exactly how involved they want to be.
Step Two: Highlight Goals
We use the information we learned during our consultation to set specific, measurable goals.
Step Three: Craft a Plan
We take everything we learned from Step One and keep the goals set in Step Two in mind as our end game while crafting a specific step-by-step plan for success.
Step Four: Execute
Execute the plan as outlined in Step Three; it’s as easy as that!
The Big Picture: What Does the Process for Real Estate Investments Looks Like in Motion
To show our process in motion, as an example, we recently had a new client come to us. He had worked with us briefly before and wanted to be more involved in what we are doing in Naples. So we took a moment, and during the consultation, when asked the level of involvement he wanted, the client was more than happy to sit back and let us do our thing while he supplied additional equity for us to work. His goals that we highlighted were simply to get his feet wet in the Naples area and grow wealth simultaneously. Together, we found a home ready for renovations but with decent profit opportunities; he provided the capital and gave us the reigns for the project. So when the neighbors came to us and offered us a 20% increase on what we paid into the property, just so they didn’t have to live next to a development or construction area for a while, our client was thrilled that we were able to make that return in just four short months.
Interested In Partnering With Naples Relocation Experts?
The TL;DR of it all is that when you partner with Naples Relocation Experts, we will figure out the right process for you together. If you are an agent and need to learn the area and you have a client that wants in on Naples, bring us to the table, and we will be just as involved as you want. We can be involved directly with the client. We can be completely hands-off with the clients, deal with builders, and sign off on work. When it comes down to it, we just want to do deals, help each other, and have fun while making it possible for everyone to win.
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Investing in Naples Luxury Real Estate
