Buying Portfolios vs Single Properties on Roofstock.com

[Jenny Peng]

Hi guys! I'm an investor looking to diversify into real estate. I'm located in California, and I'm looking to buy into remote properties since it seems that the return is much better than locally. However, I do not want to go through the process of managing the property myself and having to fly back and forth. I found a site called Roofstock that claims to do all the work for you and it seems that there are pretty good reviews and experiences. I see also that they sell entire portfolios. Has anyone had any experience buying portfolios from roofstock?

Are there any pros cons to buying a portfolio over just buying multiple of your own single property? Is it bad to start out by buying multiple homes in one general location (as in a portfolio) as opposed to a more expensive single property?

Specifically in the case of roofstock.com, I'm leaning towards the portfolios since they seem to be a better deal than the individual properties.

Sorry if these questions are obvious or have been asked before!

[Jeffrey Isenberg]

Jenny,

Great question as there is indeed a lot of focus placed predominantly on cash flow that makes the returns associated with out of state appear to be the way to go.

However, real estate returns are obtained from 4 areas: cash flow, appreciation, tax benefits & equity build up through amortization.  When combined with the appropriate use of leverage, you can supercharge your returns in excess of 20% right here in the local market.  

Often appreciation is overlooked, however this is a very important component that allows you to re-leverage at the appropriate times to build your portfolio towards achieving the goals of income replacement and wealth building.

Keep educating yourself with the knowledge from the BP community.   Once you have the right team in place including property management, investing in your own portfolio is not that intimidating.