Change can be scary. When it comes to our investments, it can be even scarier. We don’t like uncertainty in the investment game, so when it feels like things might be on shaky ground, our temptation may be to panic or even jump ship. Whether it’s a regular market fluctuation, economic downturn, or something else altogether, a rapid or suddenly changing real estate market can make our heads spin.What’s a real estate investor to do? Here are your best steps when faced with a market that’s shifting beneath your feet.
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4 Things Real Estate Investors Must Do When the Market Shifts
Don’t Panic
When something unexpected happens with the investments we’re involved with, our first instinct is often to panic. We’re afraid of losing our hard-earned investments, after all. We don’t want to lose all that we’ve worked for! When the market shifts and especially when we perceive a loss of value, this is the time when we see many investors jumping ship, selling their shares, or cutting properties loose.
This is what investors do when they panic. Don’t be an investor who panics. In the case of stocks, the mass selling of shares often exacerbates the problem. For a buy-and-hold investor, it’s important to focus on the "hold" part of your descriptor. You’re in this thing for the long haul, and market fluctuations are often temporary. You can get through a bumpy patch.
Keep a level head and don’t make a rash decision based on a market dip or a hiccup.
Examine Your Portfolio
That said, not panicking doesn’t mean ignoring due diligence. It’s crucial that every investor hedges themselves against risk. Markets can crash and local economies can have crises that can have long-term ramifications for investors. It’s important that your portfolio can handle these eventualities.
Have you made portfolio diversification a priority, or are all of your eggs in one basket? At Memphis Invest, that’s why we’re offering more and more market opportunities for our investors all the time—so you can have greater portfolio diversity to hedge against risk and capitalize on great investment opportunities in markets across the nation.
If the market is facing significant change, take the time to scrutinize your portfolio to ensure that it can weather the storm and sustain any long-term dips in passive income that may be thrown your way.
Revisit Your Strategy
Investors have to be prepared not only to diversify but to revisit their strategy as a whole. Market fluctuations come with an advantage in that they can expose issues that we were previously unaware of. When foreclosures were at an all-time high in the U.S. post-recession, real estate investment was big. This was largely because it was easier than ever to do. The cost was low and the potential reward was high.
Related Article: Building a Real Estate Investing Strategy: Minimize Risk in Your Investments
When the market shifted towards recovery, however, it became significantly harder to invest again. In reality, it was returning to the status quo, but this lead to many fair-weather investors jumping ship. They weren’t prepared to deal with a normal market and weren’t willing to adapt their strategies.
Agility and flexibility are crucial qualities for real estate investors hoping for long-term success. When the market shifts, you have to see if your strategy is going to hold up. Are you really in the right market? Is it still comfortable for you? Do you need to further diversify?
This is the time to make sure your strategy is tight, your services are top notch, your expenses are low, and your systems are at peak efficiency.
Stay in the Know
One of the biggest mistakes real estate investors make is simply being ignorant of the conditions of the markets they invest in. Before the real estate market shifts, you should see change coming a mile away because you’re reading local news, staying in tune with local economic development, and keeping your ear to the ground.
Through changes, this should be even more true!
It’s a lot easier to deal with market fluctuations when you have a turnkey partner in your corner. Memphis Invest has carefully investigated and selected markets with outstanding opportunities for our turnkey investors. We’re there for you every step of the way, whether you’re just starting out or revisiting your strategy years from now.
Your best financial future is waiting!
