As predicted, 2023 will likely be a year of transition, and we can expect a turbulent market. The market has pulled back 10-15% from the highs in the Spring. The buyer frenzy has undoubtedly waned. The days of the highest and best on any junky property are long gone. But as real estate investors, we will need to make money and mitigate our risk in any market. So what is your plan for success in 2023?
These are the four areas I like to concentrate on in a turbulent market:
- Quality Always Wins: I have discussed the importance of quality in previous articles. A shiny apple always sells first. You will always be able to sell, rent or refinance your asset in any market if it’s pristine. So make sure you are adding value for the end user. Go the extra mile with your rehab. Add appliances. Supply a washer and dryer to your rental. Supply a home warranty. Do the little things a customer will notice and separate you from everyone else. I’ve spoken to many investors who are still getting top dollar for their fix-and-flips and rentals because they offer excellent properties: great locations, floorplans, and finishes. When flipping houses, I always wanted a buyer to walk thru my house and say, “I have to live here.” That should be the goal.
- Keep Price In Mind: The market will dictate what your property is worth. Price your property to sell rather than jacking up the price expecting the buyer to negotiate down. Price it at what you think the sale price will be or even below. The goal is to get plenty of qualified people thru your property and hopefully get two buyers to bid things up. Inventory is still low, but it’s creeping up every day. Now is not the time to be greedy, now is the time to move your properties and make money.
- Cash is King: Rates have been rising, and lenders are tightening their terms. Always keep some money for a rainy day. Saving isn’t fun, but it’s the prudent thing to do. I always pull funds off my line of credit, even if I have extra cash in my account. I know there are no restrictions on my cash, and my line has some guidelines I need to follow. Even though I’m leaving some profit on the table, having the extra cash will pay off in the long run. It allows me to do deals when other people can’t. It also lets me sleep at night; that peace of mind is priceless.
- Don’t try to keep up with the Joneses: Know what you want from your investing career. Knowing takes deep thought and soul searching to know what you want to be, but it’s worth the time. Don’t worry about what other people are doing. Most of them are full of it anyways. If you ever talk to someone who’s a gambler, they always tell you about their big scores, not their bad bets. Same with investors. They brag about how they made $50K and didn’t do anything. That can happen, but it’s not the norm. These are the things that are important to me when it comes to my work;
- Doing something I love
- Helping people
- Being my own boss
- Controlling my income through my effort
These are in order of importance to me. As you can see, there are more important things to me than money. Put a list together of what’s important to you. Defining your goals is the first step in accomplishing them.
I hope 2023 is better than expected and that it won’t turn out to be the turbulent market experts are calling for. But remember, there are always opportunities in every market. Our job as investors is to find them.
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