Building an investment portfolio through real estate is a common strategy for many people. One way to do this is by purchasing a new primary residence every two years and renting out the previous residence. Here’s a step-by-step guide to help you understand the process of building an investment portfolio in this manner.

Step #1: Research the Housing Market
Before making any real estate investments, it’s important to research the local housing market to determine if now is a good time to buy. This includes evaluating trends in home prices, rental rates, and demand for rental properties in the area where you plan to purchase.
Step #2: Assemble your Team
Consult a lender to make sense of your personal financial situation, including your income, savings, and credit score. A real estate agent can help you find the right property and navigate the home buying process. Your realtor can provide valuable insights on the local housing market, assist with negotiations, and handle all the paperwork. Check out our Buyer’s Guide to learn more about the process.
Step #3: Determine Your Budget
Once you have a good understanding of the housing market, you and your lender will determine your budget for the purchase of your new primary residence. We’ll assume a 5% down payment to maximize your investment potential.
Step #4: Buy Your New Primary Residence
Be sure to take your time and choose a property that meets your needs and will also have good rental potential. A home in a desirable location, with a reasonable price, and low maintenance is ideal for renting out.
Step #5: Rent Out Your Previous Residence
After you’ve moved into your new primary residence, you can now rent out your previous residence. You will need to make any necessary repairs or upgrades to the property to make it appealing to potential renters. Once the property is ready, let’s get it rented for you.
Step #6: Manage Your Investment
It’s important to manage your investment property properly. This includes collecting rent, handling maintenance and repairs, and ensuring that your renters are following the terms of the lease agreement. Working with a property management company can help take the burden off of you and ensure that your investment property is being properly taken care of. We have relationships with some of the best property management companies in town and are happy to connect you.
Step #7: Repeat the Process
After two years, you can repeat the process and purchase another new primary residence while renting out the previous one. This will allow you to continue building your investment portfolio and potentially generate passive income from your rental properties.

Buying a new primary residence every two years and renting out the previous residence is a smart strategy for building an investment portfolio. By following converting your primary residences to rentals, you can take advantage of the real estate market, diversify your investments, and create a steady stream of passive income.