RealtorPeg: Real Estate Investing in a Slow Market

Real Estate Investing in a Slow Market

by Mission Hills Prudential

Real estate investors worldwide have all known moments of panic and despair in the last two years, as real estate markets around the globe have suffered painful crashes. With the backdrop of a troubled housing and rental market, it’s more important than ever to learn survival and success tactics for any economy, any housing market, as they rise and fall over the years. Here are a few tips to not only survive, but thrive as a real estate investor and landlord in difficult times.

Tip 1: Review Your Rental Portfolio
No matter how many rental properties you own, chances are some of them reliably put money in your account every month, while others consistently show up red at the end of the year. Knowing which rental properties are causing the problems is the first step to solving them, so sit down and review your books for the last few years to determine where the leaks are.

Tip 2: Identify the Problems & Implement the Solutions
Have a tenant who consistently pays their rent late, or constantly demands repairs in your rental property? Offer incentives for early rent, immediate eviction notices for late rent, and demand a double security deposit based on the number of late rental payments. Have a rental property that suffers from a high turnover and vacancy rate? Sign a longer term rental agreement, preferably with older, more stable tenants. Not enough cash flow? Consider raising the rent (if the market supports it), or…

Tip 3: Creatively Increase Your Rental Revenue
Cash flow from a rental agreement can be increased by, well, adding a second rental agreement! If you have a rental property that can be divided into two units, you can increase your total cash flow from that property. Likewise, look for extra spaces of value, that may be able to be rented separately, such as a parking space downtown, or a detached garage. Consider all options, and with some ingenuity you may be able to find ways to increase your revenue.

Tip 4: Build the Right Team
Real estate investors are part of a team, that includes title companies, appraisers, accountants, bird dogs, property management companies, etc. How are the people you work with? What do they charge? Is your accountant a real estate specialist? Do you buy your investment properties in the most protective legal entities? Does your property management company have a strong history of signing new rental agreement contracts quickly? There may be some weak links in the chain, and the trick is to talk to other real estate investors to better evaluate how your team performs and charges.

Tip 5: Research and Strategize
The most successful real estate investors out there don’t make guesses or emotional decisions, but make informed, educated real estate investing choices. To do this, they are intimately familiar with their target markets, and can tell you exactly why they’ve made every single investing decision they make. Zoning changes, demographic changes, local employment changes, urban planning, and population projections are among a few of the many trends that good real estate investors track, and allow them to form a series of exit strategies depending on unforeseeable events. For example, an investor might by a shell in the annual winter slump, spend the winter and spring renovating it, and then try to sell during the summer housing boom. If the property fails to sell for a preset price, the investor might then switch to a second exit strategy, and sign a rental agreement with an option to purchase, or hand over to a property management company to manage until the local real estate market is high enough to sell the property for the target profit. Be prepared to sell for the right offer, and be prepared to hold with a rental agreement if the right offer is not forthcoming.

Economies rise and fall, as do real estate markets. Money can be made in all markets and economies, but the strategies to do so can differ, so hit the drawing board, write an appropriate business plan, and don’t be afraid to buy and hold using a rental agreement if you can’t sell for a profit right now.

via articlesqueeze.com