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How to Create a Real Estate Portfolio

Hello, property and potential property owners! Welcome to the RPM Distinguished Care blog, where we provide practical advice about property management! If you’re a return visitor, welcome back. We sincerely appreciate your support! RPM Distinguished Care specializes in managing successful rental properties in and around the Charleston area. We’re here to make your lives easier by giving you the resources you need to maximize profitability and have a successful rental property. We provide comprehensive property management services at every conceivable level. From advertising and marketing, to responding to applications, to inspecting and maintaining properties–there’s nothing we do not do. Further, we ensure tenant compliance, handle necessary evictions, and report directly back to you about revenue and profit potentials. We aim to make owning rental property as easy for you as possible, for as little money as possible. Check out the rest of our site to meet our team and discover what makes RPM Distinguished Care the best property management company in Charleston!


For those looking to invest in short-term rental property in the Charleston Metropolitan Area, our last article is the perfect resource to familiarize yourself with the codes, regulations, and ordinances in effect here. Short-term rentals are subjected to different standards than long-term rentals and these standards are different depending on where you choose to invest. The Charleston Metropolitan Area includes Charleston County, Berkeley County, and Dorchester County. According to the ordinance set forth by the Charleston City Council, the city of Charleston is divided into three categories, each of which has its own criteria for qualifying for a short-term rental permit (residential or commercial). We took a look at regulations in Mount Pleasant and Summerville. As well, we provide a rundown of what you’ll find on the short-term rental permit application, how much you’ll pay in fees, and much more! Definitely take advantage of our previous article if you have your mind set on owning short-term rental property here in Charleston! 


Our past few articles have set about breaking down the fundamental benefits and consequences of investing in: short-term vs. long-term rentals and single-family vs. multi-family rentals and crafting long-term goals for your rental property. Now, it’s time to combine everything we’ve learned to create a real estate portfolio. Everyone must begin somewhere. For real estate investors, that starting point is often one property. However, those with an eye on the future often dream of having a collection of properties. A rental portfolio is a list of real estate investments and, just like any investment portfolio, benefits from diversity. Building a profitable real estate portfolio consists of making decisions that align with your long-term goals, following a set investment strategy, and remaining consistent. Today, we’ll discuss what to consider while building your real estate portfolio to set yourself up for success! 


Defining Your Goals


As we discussed in our Crafting Long-Term Goals for Your Rental Property article, ultimately there can be no success without a clearly defined goal. Of course, the primary purpose of investment is to create profit. When considering profit goals, you’ll want to isolate whether you’re interested in monthly cash flow, appreciation, or both. Now, when you only have one property, it’s smarter to choose one of these two profit goals to allow yourself a better chance of reaching said goal. For example, if your goal is to hold onto a property for over a decade and reap your return later, you might consider offering longer lease terms to higher-quality tenants. If your goal is to sell in a year, or six months, you’ll offer short lease terms (or might not lease at all, opting instead to renovate). When you only have monthly cash flow from one tenant–or even one set of tenants–how you use this income is going to be different than if you had monthly cash flow coming in from multiple sources. 


Multiple properties allows us to reach our goals through multiple means and, often, much quicker. That said, we still need one goal to unify your investment strategy. Is your real estate portfolio essentially a business? Are you looking to gain financial freedom through passive income? Are you looking to make money so you can reinvest in a different asset class down the line? Your goal is what will propel you forward and guide each of your investment decisions. Spend plenty of time making sure your goal is the right one for you. 


Creating a Strategy


Once you’ve defined your goal, you can set about creating a strategy to help you reach your objective. For example, if your goal is to enjoy a passive income which grants you financial freedom, you might invest in rental properties. If your goal is to only invest in one property, you might choose a multi-family property. If your goal is to be hands-off, you might procure the services of a property management company. If you want to invest in a multi-family property and be hands-on, you might live in one of the units and let your rent be a business expense. (You can only take advantage of the home office deduction and other tax breaks if your rental activity is classified as a business instead of an investment. To be classified as a business, you must earn a profit and work at it “regularly and continuously.” For this reason, it’s important to clarify your goals early.) 


As you begin to invest in more properties, you’ll need to keep things organized. You might have one property being rented out and another property being renovated. You might have some properties managed and manage other properties yourself. Keeping a spreadsheet and plenty of documentation will make assessing the success of your real estate portfolio (which we’ll discuss later) much easier!




Diversification of your real estate portfolio is, in and of itself, a strategy. Diversification is a risk-mitigation strategy, used to protect your financial interests should something unexpected happen. For example, if you only owned one piece of property–say a single-family home–and mold made the property unlivable, your rental income is entirely cut off so long as the property is unlivable. Likewise, if you owned two pieces of property in the same area and a sudden spike in crime made the area undesirable to live in—suddenly your rental income is inconsistent as you struggle to find tenants. Here are three areas to focus your diversification efforts: market, asset class, and type of property. 


The local market is often an investor’s go-to, as these appear to be the safest. After all, you know the area and are close by in case something happens. However, when diversifying, consider long-distance investing. Who’s to say you own property in another state? Or even another country? You’re more likely to need the help of a property management company when you live farther away, but having multiple properties in different rental markets helps to mitigate risk. As far as real estate asset classes, there are three main categories: residential, commercial, and land. Among residential real estate, there are the asset classes of single-family and multi-family properties. Among commercial real estate, there are the asset classes of office, retail, industrial, multifamily, and hospitality. Among these, there are further distinctions between classes of property, with Class A representing high-quality property and Class C representing lower-quality property. Finally, there’s the type of property. Are you investing in short-term or long-term rentals? 


If you already have one residential property in one area, you might diversify by investing in a commercial property in another area. Of course, branching out into a new market, asset class, or property type requires plenty of research and planning. That said, don’t be afraid to diversify!


Assessing Success


Assessing the success of your rental portfolio is something you should do periodically to ensure your portfolio is bringing you closer to your goals and yielding an appropriate return on investment. This is where your spreadsheet and documentation come in handy. You can consult with professionals or define your own metrics, but you’ll want to identify your net cash flow, your cash-on-cash return, your economic vacancy rate, and your portfolio’s appreciation.


Remaining Consistent

There’s nothing more important than remaining consistent. Once you define your goal, it’s about making decisions that align with this goal. You cannot achieve everything at once. Certain monetary markers, such as appreciation, take time. With plenty of patience, planning, and a great portfolio—you’ll reach your goals without a doubt! 


At RPM Distinguished Care, we work alongside our clients for however long it takes to reach their unique goals. We levy every asset at our disposal, including over thirty years of experience and a dedicated team of individuals, to be of assistance. From tenant screening to leasing to inspections to marketing–there’s nothing we do not do. We believe in full-service and comprehensive property management. That’s why we take the time to understand each of our clients and help identify their most closely-held goals.  Use our website to request your free assessment and meet with our expert team! Thank you for taking the time to read this article and we hope to hear from you soon!

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