During different seasons and cycles of the real estate market, investors will find their priorities changing. Maybe property acquisitions must take a backseat or decrease in frequency. When your focus must shift, you may not always know what to do with yourself.
If this happens, real estate investors aren’t stuck without anything to do. If anything, what you do in the interim will set the stage for lasting success. After all, even passive investors aren’t truly passive.
What to Do When You're NOT Buying at the Moment
1. Investigate investment markets
Investors must be aware of every opportunity to diversify their portfolios. Even if you’re not planning to buy right now, being tuned into different markets will help you identify future targets. You do this in two ways: looking at investment markets broadly and zooming in on specific areas.
On a broad level, you’ll make apples-to-apples comparisons between different markets, their price points, real estate values and rental demand, economic climate, and specific challenges and risks. Then you look at each market more closely – examining areas with ongoing development and construction, desirable neighborhoods, and where rental demand is high.
This doesn't mean to forget about the market you're already in. Take a look at different neighborhoods, price points and keep a close eye on the homes near your property. Opportunities often present themselves when we are not necessarily looking to make a move, so being prepared and up-to-date is always important.
2. Audit your portfolio
Your portfolio can always be refined. Look at everything in the full context of your financial goals. Are you on track? Is each property serving a specific role and purpose? Do some things just not fit anymore now that you’ve refined your strategies and found your niche?
Now is the time to look at what you already own. Review the performance of each property and determine if there’s something you need to let go of. Even if there’s nothing to cut out, there’s bound to be a property that can be better managed to preserve and generate more passive income.
The biggest place to audit your portfolio annually is insurance. Yes, REI Nation has it's own insurance program and we know that it reduces costs for our investors, but not every investor uses our program. At the same time, even investors on our program should investigate alternatives just to be sure you cannot get a better apples to apples cost. Insurance is one of the few line items on a rental property budget that may be able to go down (or may not), so make sure you check.
3. Network with peers
What’s the merit of networking with other investors? For one, your shared experience brings you together with a common understanding. Other investors can give insight into strategies you may not have considered, give you advice regarding who to work with and who to avoid, and provide the inside scoop on unfamiliar markets. In some cases, you may even network with these investors only to find them becoming your mentors, private lenders, or investment partners.
Networking allows you to learn from more experienced investors, renew your motivation, and expose you to ideas you hadn’t considered before.
I'm not sure how many of our rental property owners have been to one of our REI Nation events in Memphis, Dallas or even when we visit clients in on the coasts. If you have, then you know they are a great way to meet other investors. If you have not, well, you're in luck! We are already working to start hosting investor meet and greets again in our cities plus plan to make it back out to Los Angeles soon and more cities after that. These events have been critical in our ability to get face time with our clients and we are ready to get to it again.
4. Review your strategy
As you gain experience as a real estate investor, you’ll find yourself falling into a groove, a niche. You’ll better know what you want to do and how you need to do it. Look for these changes in yourself and your portfolio. Create an action plan that lines up your goals and assets with the strategies you want to commit to. It may help here to connect and review with your portfolio advisor!
5. Forecast the risks
Risk management isn’t a one-time task. Investors must always be aware of the potential and emerging risks. These risks can come from virtually anywhere, from natural disasters and extreme weather events to economic and demographic shifts in your investment market. And that’s just the big-picture stuff! Looking at existing and potential risks also means signing off on necessary repairs and replacements for your properties. You’re looking to not only increase your equity and rental rates but minimize the potential for unexpected costs.
Just because you’re not actively acquiring investment properties doesn’t make you a stagnant investor. None of us can sit back and wait for success – we must pursue it with every tool and strategy at our disposal.
Questions? We'll help you, like we've helped investors build their real estate portfolio for over twenty years.