When a real estate portfolio is performing well, investors often start looking for ways to scale. While expanding operations and adding new properties are straightforward ways to grow, an uncertain market, a miscalculation, inadequate systems or poor planning can immediately turn an investment with potential into a costly mistake that puts your portfolio at risk.
Below, 20 Forbes Business Council members detail overlooked risks or mistakes investors make when scaling a real estate portfolio. Read on to learn more about the impact of these mistakes and what can be done to mitigate them.
1. Skimping On Due Diligence
Cutting corners on due diligence is one of the biggest mistakes investors make when scaling a portfolio. In the rush to grow, time pressures can make investors view deals through rose-colored glasses. Due diligence can erode under market pressures like cap or interest rates. Maintain discipline, even if it slows growth. A smaller, more sound portfolio beats a larger one burdened with avoidable issues. – Edward Fernandez, 1031 Crowdfunding
2. Chasing Deals
First, stay true to your vision, thesis and strategy. Don’t chase deals. Sometimes, there’s not enough deal flow that fits your strategy, and it can feel like you’re missing an opportunity by not deploying capital. Second, understand what portfolio growth means for your operating margin. Build a hiring plan that you can use to scale operations. – Andrew DeNardo, First National Realty Partners
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3. Ignoring The Differences Between Property Types
Scaling is more than buying properties—it’s understanding the operational complexity of each one. Staff, systems and local markets all differ. If you ignore that, even the best deals can fail. In my experience, successful portfolios are built through a disciplined strategy that addresses these realities head-on. – David Brooks Holstein, LifeCare Properties, LLC/ Comvest Properties, LLC
4. Failing To Consider Changing Local Regulations
One mistake is overlooking local regulatory landmines. Investors fixate on ROI but often miss zoning changes, tax hikes or tenant laws that can wipe out profits overnight. The impact is costly delays, legal battles or stranded assets. Always stress-test deals with a local lawyer before signing. – Henri Al Helaly, EXILLIUM
5. Overlooking Tenant Satisfaction
When scaling a real estate portfolio, many investors overlook tenant satisfaction. Cutting corners on maintenance or service may save money in the short term, but it can also lead to the loss of tenants and the development of a poor reputation as a landlord. This not only drives up vacancy and turnover costs, but also undermines long-term asset value and growth potential. – Craig Plescia, Plescia Construction & Development
6. Failing To Prioritize Quality Tenants
A common mistake when scaling is failing to prioritize high-quality tenants. Cutting corners on tenant screening as portfolios grow can lead to legal issues, property damage or evictions. One bad tenant can erase profits from several good tenants. Build strong screening processes early to ensure a stable income, protect your investment and grow sustainably, even if it means longer vacancies. – Nathan Miller, Rentec Direct
7. Using Too Much Leverage
Overleveraging is a common mistake. Chasing growth with too much debt leaves investors exposed when markets shift or cash flow dips. A sudden rate change, vacancy or downturn market can turn gains into losses quickly. Sustainable scaling requires balancing leverage with liquidity and long-term resilience. – Victoria Marshall, Erase.com
8. Underfunding Liquidity
A common blind spot when scaling is underfunding liquidity. Investors get caught up in acquisition math but fail to keep cash cushions for vacancies, capital calls or rate hikes. Without reserves, one rough quarter can force distressed sales and stall long-term plans. The impact would be years of compounding growth being wiped out because liquidity wasn’t treated as a strategy. – Volen Vulkov, Enhancv
9. Underestimating The Importance Of Great Property Management
I have scaled up three real estate businesses and watched many others do it. Don’t underestimate how important great property management and leasing are. Be ready to do it yourself if you have to in order to achieve the results you want. Concentrate properties in the same markets, as one-off properties in a city don’t allow for the focus needed on the asset. Get long loan maturities to bridge a cycle. – Barry Raber, Carefree Covered RV Storage
10. Neglecting Operational Systems
One overlooked risk is operational drag. Too many investors add doors faster than they scale maintenance, do make-readies and ensure compliance. Pro formas assume every unit performs the same, but in reality, a growing work-order backlog and slow turns eat net operating income, raise churn and force distressed exits. Build the operations spine first through local crews, a property management system, parts on hand and 24- to 48-hour SLAs—then grow. – Iaroslav Nikitin, Be James Team
11. Underinvesting In A Reliable Power Supply
If you are investing in real estate for power-intensive projects like industrial production or server infrastructure, make sure it has a reliable power supply. Your properties should ideally have two independent electricity sources. – Ivan Shvaichenko, Boosteroid
12. Failing To Implement The Right Tech For Scaling
One risk is failing to implement the right technology to manage properties and expenses effectively at scale. As portfolios grow, manual processes break down, leading to poor visibility and missed financial signals. Without systems to track expenses in real time, investors can lose control and face reduced returns. Scalable tech isn’t a luxury—it’s a necessity for sustainable growth. – Phillip Schloter, ABUKAI
13. Skipping Inspections
Inspections are the most overlooked aspect of purchasing real estate. They’re vital, but often not thought about when assessing property value. – Tammy Sons, TN Nursery
14. Thinking Short Term
Real estate is the best way to make generational wealth. However, it does come with risks. Commercial real estate is the easiest to acquire, but you need good leases for the financing to be easy. Residential is cheaper, but you’ll need to jump through more hoops. Always look at the long-term play when acquiring properties. Find properties with long-term leases in good markets. – Bryon Hough, Children’s Activity Management
15. Failing To Consider Psychological Bias
One overlooked risk in scaling a real estate portfolio is psychological bias—especially overconfidence. Investors often mistake early success for a repeatable formula. Without rigorous analysis and external checks, this leads to poor decisions and costly overreach. Real growth requires reflection, not just replication. – Paul Boross MBE, Big Sky
16. Focusing Solely On Gross Yield
Investors chase high-yield properties in weaker markets or distressed assets without stress-testing net operating income. They often overlook rising utility costs, management fees, turnover, leasing commissions and capital expenses. It’s time to stop focusing on gross yield and start prioritizing sustainable cash flow with a minimum of six months of reserves before scaling. – Bojan Ilic, Swiss Security Solutions LLC
17. Underestimating Liquidity And Exit Strategies
The most overlooked risk is underestimating liquidity and exit strategies. Too many investors focus on acquisition as the sole measure of growth, forgetting that true scale demands agility. Markets shift and cycles turn. Without flexibility in how you reposition or exit assets, what looked like growth can quickly become unsustainable exposure. – Humphrey Ho, Helios Worldwide
18. Miscalculating The Strain Of Scaling On Operations
Most investors underestimate the operational strain of scaling. They focus on acquisitions but neglect tenant quality, legal compliance and maintenance infrastructure. Without strong systems, portfolios grow faster than the capacity to manage them. The result is cash flow disruption, legal exposure and asset value erosion that could have been avoided with proper controls. – Nathan Levinson, Royal York Property Management
19. Failing To Consider Potential Property Value Declines
One commonly overlooked risk in scaling a real estate portfolio is the potential decline in property values. Many investors focus on cash flow and expansion but underestimate market corrections. A sudden drop in prices can erode equity, limit refinancing options and slow growth. This can impact both short-term liquidity and long-term returns. – Jekaterina Beljankova, WALLACE s.r.o
20. Forgetting The Human Element
When scaling a portfolio, investors often overlook the human element, including leadership and culture. Growth on paper can falter without aligned teams and resident focus. At RR Living, we’ve seen that true value creation comes from investing in people, as it ensures culture scales as fast as assets. – Melanie French, RR Living