We’re well aware that we are currently venturing into the unknown, not only as it relates to investing in real estate but in life as we know it. The COVID-19 pandemic is unavoidable. All of us have to address and deal with it in our own ways, personally and professionally.
With a record number of people claiming unemployment, over 20,000 American deaths as of Easter Sunday, and general economic turmoil, there’s no avoiding it. We are all seeing the ripples spread in our communities, from empty shelves and business closures to knowing, firsthand, people who have been affected by the virus.
In the real estate industry, things seem to be on even shakier ground. The Spring homebuying season is effectively a bust, realtors are unable to show homes, and open houses are out of the question. Even with the increase in opportunities through virtual home-touring, the vast majority of people are not looking to move in the midst of a global health crisis.
We don’t know what the future will bring. But we do know how real estate investors can best prepare for their future, whatever it holds.
Here are our top tips on forging ahead through uncharted territory — be it navigating the anxiety and unknown of COVID-19, or simply diving into new markets and investment strategies.
4 Provisions for Real Estate Investors Facing the Unknown
Develop a Long-Term and Short-Term Plan
Much of our success in real estate investment depends on our diligence in planning. For the real estate investor, particularly a buy-and-hold investor, both a short-term and long-term game plan are essential.
Overall, passive real estate investors are more concerned with the long-term. This is beneficial because it means that temporal market conditions are less of an issue where profitability is concerned. Not only that, but passive investors feel less pressure to take immediate action in order to make gains or prevent losses.
Be sure to check out: 3 Ways Real Estate Investors Manage Unexpected Risk
That said, one must be thinking about both the long-term and the short-term. Begin with the long-term. Vision casting the future for yourself puts short-term decision-making in perspective and in the proper context. These plans can begin rather ambiguously, but they must take shape into more concrete goals. What is your ultimate cash flow goal? How many properties do you wish to own?
These are basic long-term goals to consider. Your reasons for investing are also paramount in solidifying these goals. These reasons — your motivation — keeps things in check.
As far as the short-term goes, we must adapt and make decisions (such as when to acquire new properties, sell investments, etc.) based on our big-picture ambitions. As we change and navigate current circumstances, keeping an eye on the overall goal of your investing career allows you to stay on track, even in the middle of unexpected upheaval.
Rather than trying to survive in the moment, your attention is on the bigger, greater implications of today’s decisions on tomorrow’s wealth.
Account for Contingencies
In this time of uncertainty, contingencies and emergency funds are more necessary than ever. Even if your investments are not significantly affected by unexpected circumstances, other areas of your life (and finances) may be. An emergency fund is key, not only for your investments but for life in general! This is a part of our due diligence as investors.
There can be pressure on us to buy, buy, buy in our consumer-driven culture. That goes for real estate as much as it does for everything else! The key here is to buy when it makes sense. Part of your strategy should strike the balance between acquisitions while having enough capital on hand to deal with the unexpected.
We don’t want to hoard our income (passive or otherwise) — we want to make it work for us. That income, however, works best when it holds both offensive and defensive investment roles.
Lean on Your Support Network
For real estate investors, a strong support network is priceless. Your support network can be built from varying groups and individuals. Family members, peers, mentors, and your own professional investment teams, all contribute to the full scope of your support. However, when it comes to taking advice and finding direction, no one matters more than the teams you trust with your investments.
REI Nation is made up of these teams, from your personal portfolio advisor to the property management teams that keep your properties well-kept and generating income. In times like these, lean on that support. Look to those who know you, your goals, and your finances best. They can help you discern the best course of action in making the most of your financial future.
Stay Informed but Not Overwhelmed
During times such as these, we all want to have the most information possible. We have this desire to be up-to-date and in-the-know, as if not to be caught off guard by any development. We want to see things coming.
There’s nothing wrong with being informed. If anything, we encourage it! However, we must be selective about what news we consume and how often. It is all-too-easy to get overwhelmed and overloaded by information. This is particularly true today, where we often bear the burden of separating fact from fiction.
Narrow down a handful of sources that you trust on a particular topic or issue and rely on them for the bulk of your information. Limit your news consumption in general, or set aside specific times to catch up.
Most importantly, fact-check. So much of what we see online are rumors and speculation. If there ever was a time to be sure of the facts, it is now. Equip yourself with knowledge so that you can make informed, rational decisions about your family, finances, and future.
Get expert counsel on your next steps in real estate investment. Consult your advisor today!
