This is the second post of a multi-part series on how property owners can set goals for their rental portfolios. Check out Intellirent's blog for Part 1 on personalizing your strategy.
Once you've had a chance to consider your personal mid-term and long-term goals, you're well on your way to shaping your rental portfolio. The next step is determining what success looks like to you.
Using Traditional Measures of Success
The experience and outcomes of real estate investing, managing rentals, or taking the role of a landlord can be complex and varied, but there are a few rules of thumb that will serve you well when evaluating properties. As you may well be aware, quantitative measures like the capitalization rate (usually referred to as the "cap rate") can be a good starting point for initially sizing up the potential of a property and its relative opportunity or risk to your overall portfolio. There are many excellent resources you can turn to for traditional measures of success whether you're a beginner or deep into the field.
It is also wise to recognize when it may be time to turn to a professional for help. As capable as you are (clearly, you're smart if you're using Intellirent!), there are times when having the advice of a tax professional, contractor, or other specialized resource experienced in rental investments will help enhance your perspective.
Considering Intangible Factors
The numbers may look good for a property you're considering adding to your portfolio, but have you considered the intangible factors? These include the effect of owning or managing this property on your quality of life, stress levels, or anything else that you care about that may be hard to quantify. For example, it may be important to you to support economic development in an area of your city or community.
Whatever your personal intangibles are, be honest with yourself about how a property may affect these. You will feel more successful and actually be more successful long-term if you're emotionally invested in a property as well as financially invested.
Check back on Intellirent's blog for the next part of this series on Setting Goals for Your Rental Portfolio.