As I trust you know, the real estate market has changed in the last 12 months. Among the factors If you are that have effected the real estate market including increasing interest rates, inflation, building supply issues, and the increasing price of building supplies. In this blog, I want to share several tips for surviving a changing real estate market. I have seen a number of changes in the real estate market since my first real estate investment in the 1970’s. I share them not so much from the perspective of being so smart, but as a person who has some “battle scars” for surving some great challenges. I commend them to you as tips from a seasoned real estate veteran. They are as follows:
KEEP YOUR INVESTMENT TO VALUE RATIO LOW- Whether you are investing in rental properties or real estate notes, keep your investment to home value low. It would be ideal to keep an investment to value of 50% or lower. This lowers your risk if the home value should depreciate.
IF YOU NEED TO BORROW MONEY, CONSIDER BORROWING MONIES FROM PRIVATE INDIVIDUALS- Interest rates have increased. This is particularly true of borrowing monies for investment properties. Consider borrowing monies from an individual who has money sitting earning little return in a bank or self directed account. They will be happy to earn 5% or 6% on their monies, and it will not adversely affect your credit score. And if something unforeseen might happen, a private investor might be more likely to work with you.
MAKE SURE YOU HAVE CASH RESERVES- While it is always important to have cash reserves, it is especially important to have them in a changing real estate market. Have cash reserves that are available in case you face a foreclosure, a rental vacancy, or the like.
These are a few tips that I would encourage you to consider. Feel free to write in the comments section tips that you would recommend. Best wishes in all your investing pursuits.- -- RL Wall