How do the most successful real estate investors proceed as rates rise and the stock market tumbles? I like to compare real estate investing to yoga when I think about how to navigate uncertain times.
FLEXIBILITY
To be a successful long-term real estate investor, you must be on your toes 24/7 and be flexible.
I’ve owned single-family rentals and apartment buildings, fixed and flipped hundreds of homes, provided seller financing on properties, built new construction homes, provided private mortgages, and developed commercial projects. I have experience in many different real estate investments because I learned to change my focus as the market changed.
As a real estate investor, you would have been a dead man if you started building new homes in 2007. If you started in 2020, you were a genius. You always want to have a goal and plan for your investments. But you need to be flexible.
Changes in the market will create new opportunities, and traditional ways of doing business will cease to be viable for some time. So take a deep breath and get ready to shift.
Suppose your goal has been to acquire rentals and build your rental portfolio. The last few years have been a great time to do so. The ability to finance properties has been easy, rates have been low, and rents have been on the rise, with the ability to find good quality tenants very easily. Unfortunately, there will be a time in the near future that this won’t work as well. Rates will rise, rents will flatten, and lenders will get out of the business or have terms that aren’t reasonable enough to have positive cash flow from your rentals. So what do you do during this time? Stop investing?
No, you become flexible.
- Start flipping properties: Take your rehab crew and skills you’ve acquired and fix properties up to sell them. Even if the profits are tight, you can still make money and start building your bankroll. You can keep your guys busy until the market has changed again for your benefit.
- Look at buying properties with seller financing: Some people will offer seller financing in a tight market, and people want to sell and have limited buyers. Find these people and work a deal with them.
- Wholesale deals: When you find solid deals that can make someone else money, pass them on for a fee, and build your network while you make money.
- Partner up: Work with a financial partner or someone for a joint venture. It’s better to have 50% of a deal than 0%.
Real Estate Investing is constantly changing. Flexibility and focus separate successful career investors from those only in it for some quick cash. So make sure you change with the times.
If you need an asset-based loan to fund your real estate investments, get pre-approved here or give me a call at 248-385-3750