Build A Real Estate Portfolio From Scratch in 2023

Masterclass from two millionaire real estate investors.

In 2022 I invested in my first piece of real estate. Check it out!

My short-term goal is to live in it for a year or two, and then either sell it or refinance and rent it out.

My long-term goal is to build a multi-million dollar real estate portfolio. But here's the thing.

I have no idea how I would grow a real estate portfolio of that size. So, I listened to a podcast with two millionaire investors (David Greene and Rob Abasolo). They shared what they would do if they had to start from scratch.

Here are four steps to building a real estate portfolio from scratch in 2023.

1 - Define your market

Ah. The old “Where you should invest?” question. Here are a few ideas for markets to focus on:

Where is the money going?

Choose a market based on where the money is going. Where are people retiring? Where are people with money moving to?

My head immediately goes to two places: Texas and Florida. I’m not saying I’m ready to pull the trigger on a property in one of these places, but they do seem like promising markets.

Every year, the IRS tracks the migration of Americans and their income across state lines. Below is a chart detailing where money is leaving (red) and where money is going (green).

The chart is interactive so if you click on it, you'll be taken to an application where you can click into different states to see the specific counties and towns experiencing the most severe migrations.

Near natural beauty?

Markets close to water, mountains, or National Parks will always be in demand. I chose to invest in the Jersey Shore because it’s been a hot destination for decades.

However, if you look at the chart above, you can see that there has been a lot of movement toward warmer, mountainous, and outdoorsy states.

When I was writing this I was curious to figure out the percentage of people whose primary reason for moving is to seek natural beauty.

I found this data set documenting the top reasons people moved between 1999 and 2020. I didn't have a chance to really dig into the data, but at a glance, it seems like natural beauty is not that significant of a reason to move.

My assumption is that it is a secondary reason to move, next to priority reasons like moving closer to family and moving because of a job. However, the data doesn't include 2021 and 2022. I'd imagine that natural beauty might be an important factor for those who work remotely and can live wherever they want, and this data would be more significant had the last two years been included in the dataset.

2 - Define your strategy

There are so many different ways to make money in real estate: house hacking, live-in flip, flipping, BRRR, buy and hold.

Choose a strategy and stick with it.

Your strategy will be different based on your resource constraints. If you have a lot of time and no money, house hacking is a great option. If you have little time and a lot of money, you should consider flipping or investing in a real estate fund.

So, what’s my strategy?

Invest in ugly, single-family homes, in great neighborhoods. Fix them up, live in them, refinance after a year or so, rent them out, and then start all over again.

3 - Build your team

The most important person on your team is your property manager. That is, unless, you will be managing your own properties. I don't know about you, but the last thing I want to do is have to deal with a flooded toilet at 2 AM.

If you find a great property manager, they’ll connect you with great contractors and handymen. These are the folks that will help with any renovations or home improvement projects.

Once you have a property manager and contractors, find the best real estate agent in your area. Target realtors that are investors themselves.

Your all-star real estate agent will connect you with a great lender and bam! You got your whole team. It’s important to build your team before making any buying decisions.

4 - Execute your strategy

You might be thinking, “But Austin, I have no money. How am I supposed to build a real estate portfolio when I am low on cash?”

Well, my friend. I have been there too. Here is what's recommended.

If you have $0 to spend…

Sign up for Bigger Pockets, start consuming their content, and engage with folks on their platform. It’s free and an invaluable resource if you take advantage of it. Bonus points if you find someone who will mentor you.

If you have $1,000 to spend…

Invest in books, courses, and other learning resources. The Bigger Pockets books are amazing. I recommend The Book on Rental Property Investing and Buy, Rehab, Rent, Refinance, Repeat.

If you have $10,000 to spend…

Look for a house in the $300k range where the seller covers closing costs. Ask your real estate agent to write this into your offers. Focus on finding big, ugly houses, in great neighborhoods. House hack and try and figure out how you can cashflow that thing.

If you have $50,000 to spend…

Execute the same strategy as above, except buy something a little more distressed. The more distressed it is, the more value you can add to it. Focus on the big, ugly houses, in great neighborhoods. Find properties with some issues that might be too daunting for other investors.

If you want to begin building a multi-million dollar real estate portfolio in 2023, follow these four steps: define your market, create your strategy, build your team, and execute your strategy.

With the right strategy and team, you can build life-changing wealth with real estate. I haven't done it yet, but I know people who have.