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INVESTMENT STRATEGY

RENTAL PROPERTIES

SPONSORED CONTENT

The BestWay to Achieve Consistent Returns in

Rental Properties A DIVERSE PORTFOLIO LEADS TO CONSISTENT CASH FLOW.

by Gregg Cohen

o you know the difference between a real estate investor and a portfolio manager? A portfolio manager understands how a diversified rental property portfolio leads to consistency of cash flow. The portfolio manager mindset will help you earn the best returns on investment and allow you to enjoy the experi- ence of owning rental properties. But the uncertainty of unforeseen maintenance costs can make it hard for beginning investors to think they can count on consistent returns. However, there are proven strategies that will allow you to earn consistent positive cash flow even when maintenance, vacancy, and the dreaded eviction happens along the way. WHAT SHOULDYOUBE LOOKING FOR? Many investors prioritize the wrong decisions. Your first and most weighty decision will be choosing your property management company. Once you’ve locked up that teammate, your next focus can turn to identifying neighborhoods in a real estate market that can offer both positive cash flow and above-average home price appreciation. Finally, you’ll work with that property management company to select the right properties in those special neighborhoods. If you focus on the right property management team and the right real estate market, deciding on the right property should be rela- tively easy and fun. It just so happens that JWB is a vertically integrated provider of turnkey rental properties. We invest in below middle-income housing because those neighborhoods provide the best risk-adjusted returns on investment. Keep in mind that even if you do choose the right property manager and the right real estate market, you D

will still experience ups and downs on an individual rental property. It’s inevitable. Within each asset, you’ll be overperforming while the home is rented. At some point, however, the resident will leave, and you’ll have a down year. You’ll then fill the property with another long-term resident, and the cycle will begin again. The longer the resident stays, the better your returns on investment and cash flow, which is why we recommend signing 2- to 3-year leases. CREATINGACONSISTENT PORTFOLIO JWB has been working hard to help investors develop a portfolio of multiple properties, so their returns are more predictable. Diversifying your portfolio will help you keep your investments stable. Our data and experience teach us that a consistent portfolio can be achieved for clients who own only a few rental properties. Let’s say you have a portfolio of three rental prop - erties. At any given time, chances are that one of your rental properties will have an issue in regard to maintenance or vacancy costs. However, the other two properties will most likely be chugging along, and you’ll be collecting rent and not having to deal with mainte- nance costs. The beauty of a diversified portfolio of three properties is that the two properties collecting rent are actually creating a cash-flow surplus compared to your original property expectations. The one problem property may briefly be cash-flow negative, but it isn’t taking money out of your personal bank account. It’s just using the surplus of cash flows created by the other two performing properties. This is the cycle successful investors who think like portfolio managers enjoy as they build their wealth in

56 | think realty magazine :: may – june 2022

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