Lower Manhattan Skyline (Photo by © Viviane Moos/CORBIS/Corbis via Getty Images)
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When you start out in real estate, you may be thinking of building a portfolio with multiple properties. In my 25-plus years of being involved with real estate, I’ve often seen successful investors who began with a single property. This strategy provides the chance to learn about the game and gain inside knowledge. Over time, as you gain experience and a track record, you can add more properties and scale.
If you’re looking to build a portfolio in real estate, consider these steps to avoid pitfalls and generate long-term returns.
Start With Your First Property
When I spoke with Drew Brenneman, founder of Brenneman Capital, on my podcast The Insider’s Edge to Real Estate Investing, he shared how his real estate journey began with a duplex that he purchased while still in college. He had saved money from earlier entrepreneurial ventures and was looking for an investment that could generate steady income.
The numbers made sense, so he moved forward and bought the property. That single deal became the foundation for what would eventually grow into a portfolio valued at more than $200 million.
Use Early Investments As Building Blocks
Once you’ve made your first acquisition, the next step is often figuring out how that asset can generate returns and create more opportunities. Over time, as a property increases in value or generates consistent income, you may be able to refinance it or use the equity as part of your capital for the next purchase. Long-term investors often hold properties rather than selling them and then benefit from the cash flow they generate.
Bill Rudin is co-executive chairman of Rudin Management Company, which was founded in 1925 by Samuel Rudin and is now led by the third and fourth generations. Its portfolio is comprised of residential buildings totaling more than 4 million square feet and commercial office buildings totaling more than 10 million square feet. When Bill spoke on my podcast The Insider’s Edge to Real Estate Investing, he shared how the company has followed the founders’ principles to make decisions.
Build Relationships Along the Way
Real estate is a people-focused business. As you expand your portfolio, relationships with brokers, lenders, partners, and other professionals often become your most valuable resources.
In many cases, opportunities appear through these networks. A broker might reach out about an off-market property. An experienced investor might share insights about a neighborhood or asset class that you hadn’t considered.
As your reputation grows, these relationships can become even more important. When people see that you follow through on commitments and operate professionally, they are more likely to bring you future opportunities.
Choose Markets With Care
Researching the data related to a city or region can help you identify places where real estate values may continue to grow over the long term. For example, Drew broadened his strategy beyond Chicago and began targeting Sun Belt cities such as Phoenix, Dallas, and Austin. These markets offered strong demographic trends and expanding job markets, which supported demand for real estate.
Develop a Strong Team
As your portfolio expands, managing multiple properties can become increasingly complex. At this stage, many investors begin to build teams to support their operations. This could include property managers, asset managers, financial analysts, and legal advisors.
Some owners eventually bring certain functions in-house, such as property management or development capabilities. Others continue to work with trusted third-party partners. Either way, having the right people involved can make it easier to operate properties and pursue new opportunities.
Stay Flexible as Markets Change
Real estate markets move through cycles, and conditions can shift quickly. Investors who build lasting portfolios often remain adaptable. As Drew noted during our conversation, scaling in real estate is not simply about acquiring more properties. It is about making thoughtful decisions and choosing investments that fit your overall strategy.
Focus on the Long-Term Vision
Many investors ultimately build portfolios with a long-term vision in mind. For instance Jeffrey Gural is Chairman of GFP Real Estate LLC which has an ownership interest in more than 50 properties. He joined in 1972 and today the portfolio has more than 13 million square feet under ownership, including iconic properties such as the Flatiron Building and The Film Center Building.
Building a real estate portfolio is usually the result of careful decisions made over many years. By starting with one investment, learning from experience, building relationships, and staying focused on long-term goals, you can gradually create a portfolio that grows alongside your inside knowledge.
