Patience is a virtue.
There are times when it seems more like a nuisance, but successful real estate investors know the value of waiting well. We’re amid an industry that emphasizes hot deals and quick moves — but that’s not always the best investment strategy.
For real estate investors that value well-managed risk and long-term investment success, patience is critical.
3 Ways Patience Pays Off in Real Estate Investment
There are some areas of real estate investment (even passive real estate investment) where agility is needed. There’s no denying that. For example, one of the greatest tools real estate investors have is the 1031 Exchange.
( We’ve written a no-nonsense guide to the 1031 Exchange here.)
In essence, this strategy allows investors to avoid capital gains taxes when selling a property. They directly re-invest the funds from a sale into a new investment property of like-kind or equal value. It’s more complicated than that, of course, but that’s why we have a guide available! REI Nation, along with our advisors, are no strangers to helping investors navigate this strategy.
Within a 1031 Exchange, there is a 45-day limit to identify a replacement property. That’s where a time crunch comes in!
We also saw, as part of the government response to COVID-19, an extension to that 45-day limit for commercial investors. Investors engaged in an exchange between April 1 and July 15 were given a property identification extension until July 15. That means that April 1031 investors were given just over double the time to search for a replacement property.
In many ways, this reflects our increasing need for patience in the real estate investment game. As the landscape of the world shifts, we need to be more prudent than ever in our investment decision-making.
So what happens when investors hold patience in high regard?
We Avoid Impulsive Missteps
As real estate investors, we’re not immune to emotions. Our world is full of the next big things and once-in-a-lifetime opportunities. We don’t want to miss out! When we’re excited about a potential investment, we want it to work. It’s all understandable. It’s crucial, however, that we don’t make impulsive investment decisions.
Wanting something to work, and it actually making sense for your portfolio are two very different things. When you have patience and objectivity, you can better evaluate the opportunities that come your way. You know that there’s no shortage of investment opportunities. You’re not desperate for everything that comes your way to work out.
Instead, you carefully evaluate the opportunities before you to see if they make sense with what you want to accomplish. That way, you avoid costly errors in judgment.
We Maintain a Sustainable Portfolio
For real estate investors, it’s not enough to have a big portfolio. We have to prioritize sustainability. Now, portfolio growth is essential for building real wealth. You’re not going to get rich on a handful of properties. That said, investors must be patient when looking to grow their portfolio.
Having patience is less about controlling impulses and more about ensuring that your portfolio is sustainable. What this means is that you don’t feel financially squeezed to cover unexpected problems or costs. It means that with each property you acquire, you have an appropriate amount set aside to deal with these costs. Growing too fast is a mistake, particularly if you lack a solid support and management network!
We Gain in the Long-Term
Ultimately, passive real estate investors are patient because it gets results. Real estate investment is not a get-rich-quick venture. Instead, investors pour in the time and dedication to grow a portfolio over the years — even decades — and reap the rewards. A real estate investment portfolio really shines when it’s been given time to mature and grow. Your debts decrease. Your passive income increases. The number of properties in your portfolio compound your worth and earnings.
It takes patience and planning to achieve a world-class real estate portfolio. During these tumultuous times, when the unexpected is the expectation, it’s more important than ever to invest with patience, due diligence, and strategy at the forefront.
That’s why REI Nation is here — to help you build your wealth one step at a time.
