6 Strategies to Successfully Manage Your Real Estate Portfolio

Despite the fact that buying a residential property or real estate is high on the list of priorities for most people, very few Indians venture into becoming full-time real estate investors. This is because real estate property has traditionally been treated as a legacy, as family wealth to be passed down through the generations. But economically and socially, we have evolved, and so has our outlook on finances and investments. Nevertheless, the younger generations are excited about the prospect of building up a real estate portfolio, watching the assets appreciate in value, and creating multiple income streams through rental cash flow and capital gains. If you want to build a robust real estate portfolio, here are some strategies that can help.

1. Learn the market – While research is important for every investment strategy, it is all the more crucial for real estate investment. Buying property involves a series of decisions ranging from location to infrastructure, real estate trends in the neighbourhood, upcoming metro stations, social infrastructure etc. All these factors will influence the ROI of your investments. A careful study of the real estate market of your city, the developing areas, challenges, and government policies can help you put together a lucrative portfolio. It is also a good idea to research top developers and the target customer and come up with a comprehensive business plan.
2. Research financing options – As a real estate investor, one of the greatest challenges is finding the right source of funds. You may want to start with one or two apartments in an up-and-coming area. Find a trusted bank or NBFC that has terms that fit your plans. For example, as an investor, you may be looking to buy an apartment that is under construction and sell it on completion. You will require a loan that allows early prepayment without any penalty. Comparing various products and negotiating favourable terms with the bank shall help you get started. Once you expand your operations and build up a larger portfolio, you can leverage the relationship with this lender and get better terms, having been consistent in your repayment history.
3. Taxes and more – A successful real estate portfolio can only be built when you have a thorough understanding of the various taxation norms that are applicable in real estate purchase and sale. This could involve anything from TDS on property sales to property tax on current holdings. Buying and selling real estate also involves capital gains tax. This could be long-term or short-term, depending on the length of your holding. It may be well worth enlisting the help of a financial advisor or a tax consultant to help you build and maintain an impressive real estate portfolio.
4. Diversify but build a niche – Like all other investments, putting all your eggs in one basket is not a good idea. You can diversify and invest in commercial property, duplexes and villas, apartments, and even REITs. This will help mitigate market risks and temporary downtrends. It is also important to identify and invest in different suburbs to reduce risks associated with stagnation or any inimical policy decisions by the local government in any one location.
5. Have a risk management plan – It is important to have the plan to mitigate risks and manage temporary setbacks. Invest in housing loan insurance and other products that cover major risks. Risk management may also involve changing plans, like redeveloping a plot of land, instead of selling immediately. Building a portfolio of real estate assets involves adding diversity and weathering adverse economic scenarios. The COVID-19 pandemic, for example, was a difficult time for real estate investors, and short-term profits had to take a backseat. But with the end of the pandemic, the resurgence of the real estate market gave a boost to the ROI. A routine assessment of your portfolio is also a key element of risk assessment.
6. Partnering right – The critical aspect of building a real estate portfolio involves partnering with the right people and organisations. This could involve top developers and builders with a great track record of delivering high-quality projects and sticking to timelines. Your Blox relationship manager can be a great resource when it comes to discovering new and upcoming projects that fit your criteria. Similarly, finding a financial advisor who can help you understand your expenses and take advantage of tax exemptions can help you optimise the ROI.

Building up a successful real estate portfolio can take time, effort, research, and considerable investment. When done right, though, it can be very profitable and be a great financial resource. It is also important for a real estate investor to undertake due diligence and have a clear understanding of the legal aspects of real estate purchase and sale.