Deciding on what you want to accomplish early in your real estate career can do wonders for you. Seattle real estate expert, Jim Thorpe recommends creating a 5-year plan is a great way to visualize your real estate goals. To begin, try to visualize where you would like to be in 5 years. Start by visualizing who you would want to be surrounded by. Who are your mentors five years down the line? How productive do you want to be? Once you have visualized the ‘who’ aspect, it’s time to move on to the ‘where’ aspect. Where do you see yourself in five years? What are you doing by then? 

Avoid setting vague goals. Don’t simply say that you want to be successful in five years, define what success means to you. Everyone’s symbolization of success is different. Create a clear vision of the type of properties you want to invest in. Are you interested in short-term or long-term investments? By envisioning your future portfolio you avoid wasting time and making careless mistakes.

To begin, you start by saving the cash flow from your rental property for a couple of years. Say your rental is netting $1,000 per month in income. This means after saving for two years you’ll have $24,000 –enough for a 10% down payment on a $240,000 house, or 20% on a $120,000 property. You’ll then be able to invest in your second property, and once there is cash flow, you’ll then be able to save the proceeds from both properties, and after a year, will have a sizable amount of cash –enough to buy a third. And so on, the cycle continues. Each time you add a rental property to your portfolio you’ll be able to save up for a down payment more quickly –as your cash flow increases with each addition.

Another way many investors get started with rental properties is by buying a duplex, or triplex, as their first property. They then rent out two of the units, often the biggest or nicest ones, and live in the small unit for the first year or two as an owner-occupant. This allows them to live rent-free, as the tenants pay the mortgage down.

Real Estate Partnership

If purchasing an investment property seems like too big of an endeavor, there are other options that require less capital and less commitment. Consider partnering with a company that specializes in turnkey real estate development and fix and flips. They simplify the real estate investment process and save you both time and money. With this method, you can benefit from having real estate experts source off-market property for you and deliver a turnkey property. This is a great option if you are new to real estate investing or interested in scaling your investment portfolio and increasing productivity.

According to Seattle real estate expert Jim Thorpe, there is one thing that things a successful real estate portfolio, the ROI. Before real estate investors dive into a purchase, they assess the property’s potential Return on Investment, or ROI.

The ROI tells you how much profit you can expect to make in rental income over the long term. It’s expressed as a percentage of the cost of the investment, and you can figure it out by using a fairly straightforward formula.

To calculate the profit or gain on any investment, first take the total return on the investment and subtract the original cost of the investment. Knowing the  ROI allows investors to assess whether putting money into a particular investment is a wise choice or not.

How to Calculate the 1% Rule

Calculating the 1% rule is simple. Just multiply the purchase price of the property by 1% – or, even easier, move the comma in the purchase price to the left two spaces. The result should be the minimum you charge in monthly rent. If any repairs are required of the property, you’ll also want to factor them into the equation by adding them to the purchase price, then multiplying the total by 1%.

Here’s an example for a home with the purchase price of $150,000:

$150,000 x 0.01 = $1,500

Using the 1% rule, you should find a mortgage that has a monthly payment of $1,500 or less and charge your tenants a minimum monthly rent of $1,500.