With rental markets tight and rents on the rise, it’s no wonder so many investors find rental property the best place for their money.
But to make big money in the rental game, you need to own a lot of properties or units. This in turn means you need a good way to manage the entire portfolio to track your return and see what’s happening with your investments.
Fortunately, there are a lot of portfolio management tools out there to help you do just that. Which ones should you make sure you have in your toolbox? Read on to see what we recommend.
Calculators
Investments are a numbers game, so success depends on being able to do the calculations to determine your potential return on investment. Among the many metrics you need to be able to figure are
- Rental income
- Cash flow
- Cap rate
- Cash on cash return
- Year-over-year ROI
These and more provide the data that helps you know if an investment is worth adding to the portfolio and when it’s time to divest yourself of a property. If you don’t know how to do them yourself, having a real estate investment calculator becomes essential.
Because your goal with each property might be different, you need more than one calculator to manage your portfolio. Figuring out the profit margin on a fix-and-flip differs greatly from estimating cash flow for a long-term rental.
Accounting Software
You can’t know if you’re making money if you aren’t properly tracking the money. This means keeping up with not just the purchase of your properties, but everything that goes into rehabbing, maintaining, and owing them.
In real estate, diversifying your portfolio means you end up with properties of different types and even different locations. As you add to it, the accounting becomes more complex, especially if you set up each property as its own entity.
Good accounting software can help you figure out appropriate budgets for each location and develop forecasts of potential earnings and losses. You can compare similar properties against each other to see how they’re doing and get clear insights on the winners and losers.
Tenant Management
While much of portfolio management relates to your property purchases, a huge chunk of what makes a rental profitable is the tenants you put into them. A tenant management tool helps you track everything related to the tenant side of the business.
The right tool should start with the application and screening process, making it easy for you to run the necessary background checks and communicate with applicants. A portal makes it easier to collect rent and send reminders since tenants can pay online. The portal can even track and budget for repair requests.
Running reports from the tool provides you with information that can help you understand whether you have rent set appropriately and any vacancy rate issues.
What Portfolio Management Tools Do You Use?
Managing investments takes time and information, especially as your real estate portfolio starts to grow. Putting together a suite of portfolio management tools can help you with making solid purchases, tracking your money, and managing your tenants. In all, these valuable tools provide the insights you need to make smart decisions about your rental properties.
If you’re considering growing your portfolio with a Charlotte-area property, contact us to discuss the area and how we can help you manage your investment here.
