Axios reports that the real estate market is rising from the dead as buyers and sellers make peace with challenging market conditions. Trends currently reflect increasing sales volume and much-needed signs of life.
Your average homebuyer can often afford to wait out poor market conditions. But, as we’ve seen, they also must accept things as they are. The same can be said of real estate investors. While it does make sense to capitalize on favorable market conditions, we can’t afford to stay dormant when conditions grow challenging.
Fair-weather investors are only in this business when the money is easy, which stunts growth potential. Investors succeed when they learn to pivot and persevere through tough conditions.
5 Reasons for Investors to Hang Tough When the Going Gets Rough
#1. You'll sharpen your skills
It doesn’t take much skill or effort to invest when the real estate market is easy to navigate. Look at the post-Great Recession market, overwhelmed with foreclosures and rental demand. It was easy to buy cheap and rent for a great profit. But when an investment is a no-brainer, the investor doesn’t always do their due diligence. When the market presents greater risks, it demands investors be on their A-game. In the end, that’s hugely beneficial. After all, a trial by fire leads to refinement!
You’ll find that gaining experience in a variety of market conditions empowers you to make better decisions, ask the right questions, and competently navigate any market.
#2. You'll learn how to adapt
Adaptability is key in real estate investment, particularly as we deal with many factors that are simply beyond our control. Investors must learn how to pivot. While in one season, it may make more sense to focus on property acquisitions, in another it may be more beneficial to maximize the earning potential in existing investment properties.
Learning to adapt means that you can shift with market cycles and continue to grow your wealth regardless of how things around you change. When you strengthen your adaptability muscles, you’ll be better able to tackle new strategies, opportunities, and adjustments necessary to make the most of your portfolio.
#3. You maximize your long-term earning potential
Fair-weather investors could also be called short-sighted investors. They’re not thinking about what their investment will look like in five or ten years. They’re only thinking about what the market is doing right now. That can lead them to bail at the first sign of trouble!
When investors go into this business with the plan and intention to stick with it, they will reap the rewards that only buy-and-hold investors see. Even if your strategy shifts, you’re constantly doing something to increase the earning potential, efficiency, and impact of your investment properties.
You claim agency over your outcomes. For the investor, that’s empowering!
#4. You stop relying on market conditions
The real estate market moves in a cycle. There will always be ups and downs. For short-term investors, this cycle has a stranglehold on their strategy. Success depends on buying and selling at the right time and predicting the unpredictable. For obvious reasons, this way of doing business carries far greater risk.
Passive investing shouldn’t be stressful. When you’re able to take a zoomed-out, long-term perspective, the changes in the real estate market don’t matter so much. These long-term, buy-and-hold investors experience far less angst and stress over the state of the market. They know things won’t always be ideal and are prepared to handle it!
#5. Stability becomes the priority
Short-term, fair-weather investors fall prey to hype. It makes sense that they’d want to capitalize on the next hot thing! They’re looking for the biggest impact in the shortest amount of time. Buy-and-hold investors aren’t like this, though. You’re not after the latest trend: you want stability. This benefits investors in that it builds and compounds into a stable source of passive wealth.
Short-sightedness creates greater risks. We can’t always predict what the market will do and our timing could be just that little bit off. Prioritizing market and portfolio reliability, though, establishes a firm foundation on which investors can take greater risks if they so choose.
Fair-weather investors will pack it in at the first sign of trouble. Smart investors, though, know that growing a stable, reliable investment portfolio will see them through to the other side.
REI Nation has twenty years of experience in the real estate industry.
Ask us what we've learned in that time.