It's the new year—and that means new opportunities to invest in real estate in the tri-state area! Investors really need to push strong into 2021 in order to gain the momentum they may have lost during the pandemic spiral of 2020. To do so, you'll need to be on the top of your game when it comes to our current real estate and rental market conditions.
Consider this your moment to shift your mentality from a 'survival' focus into one dedicated to one that meets your financial goals in the new year.
It's important to point out that you CAN still thrive without taking on considerable additional risk—and that's exactly what our top tips as a tri-state property management company are designed to help with.
Build Back Your Foundation for Future Success
2020 may just not have been your year as an investor—so what happened? Take the time now to analyze what 'put the hurt' on your investing goals last year.
- Did you take on a risky property in late 2019 and early 2020 that you assumed you would be able to turn into a profitable rental home before the pandemic hit?
- Did your portfolio lack the kind of diversification you needed to shore up these riskier investments or keep your return on investment steady when people began to default on their rental payments?
- Did you fail to take the time to thoroughly invest in the research needed to find the right vendors who had the training to respond to maintenance requests during the height of the pandemic?
- Did you accidentally place a 'Professional Tenant' into one of your properties who was impossible to remove after the nationwide 'eviction freeze' bogged down the court system?
Regardless of which unique scenarios you faced as an investor that represented setbacks for you this year, it's time to trace those duds back to the source and tighten up your operations and acquisitions process moving into 2021—before you ever try to pick up a new property.
Reduce Risk With Your Property Picks
Successful investors know they can't fall victim to 'analysis paralysis' if they want to build a successful portfolio. However, they also can't fail to do crucial research into every property before they make a purchase that could impact their entire portfolio.
If you accidentally bagged a lemon rental, consider why you acquired the property in the first place: which red flags did you miss during your research? It may be time to evaluate your selection criteria!
If you're purchasing properties in areas where you're close enough to do a drive-by inspection on, say, a foreclosure property, then take the time to do that drive-by. Any small tidbit of additional information you can acquire before you make the leap could make a big difference in your returns.
Here's an example of this in action:
You're considering a wholesale opportunity you've found. Currently, the property is listed for $101,000—but it will need some serious legwork to make it rental-ready or ideal for a fix-and-flip. You estimate that when all is said and done, you'll have to sink an additional $70,000 into the property to fix it up.
Your instincts are telling you this might be an opportunity—or a potential flop—so you dive deeper into the numbers. With some additional research, you find out the property was purchased just a few months ago for only $70,000.
As an investor, this should set off some alarm bells! You're either about to make a wholesaler a quick $30,000, or you may be walking into a property that required more work than the previous owner had anticipated. It was this little extra snippet of research that helped keep you from walking into a potential money pit.
With buy-and-hold properties, remember that your focus should always be on their long-term wealth-generating potential rather than their appreciation value: you're not a speculator, you're an investor. Your eye always needs to be on what renters want and how to stay competitive within that sphere.
Gather Information From More Than One Source
You should also ALWAYS try to get your information from more than one source. Running your potential picks past your tri-state property management team for analysis or through trusted connections in your real estate investment groups can help prevent you from walking into a disaster. Don't immediately trust information that you found online as credible or current enough to benefit your portfolio.
Here's an example of this in action:
You're presented with an opportunity to buy a split-level home that could make an excellent fix-and-flip opportunity. You calculate that, after you've made all the repairs, you'd be able to earn an extra $100,000 in profit from the sale of the home. You proceed with the purchase because the internet confirmed that you were getting a great deal and the profit potential was there.
Fast-forward after a few months of hard work, and you're ready to sell. Unfortunately, the property sits with no buyers for months, quickly eating into your profit margins. The property finally sells for a profit margin of only $7,000. It turns out that split-level homes perform terribly in your market.
It's always worth double and triple-checking your sources on any deal before you pursue it, whether you intend for your property to be a long-term buy-and-hold rental property or a fix-and-flip investment. That means running your potential purchases multiple times through more than one type of source rather than just relying on differing accounts online.
Diversify your information sources like you diversify your portfolio, and you'll build a reliable foundation for successful real estate and rental ventures moving into 2021.
Allocate Your Tasks to the Right People
If you've still been handling every detail yourself as a property investor, then you'll find that success flows more easily when you know how to assign the right tasks to the right people.
Trying to set up your own team to grow a 'real estate empire' can be challenging when you're a small-scale rental property owner with maybe only one or two properties. In that case, the start-up costs can often outweigh the benefits you'll enjoy from having the right professionals attached to the work they know best how to handle.
In that case, instead of trying to hire each individual position to handle each individual role, you'll benefit more from working with a tri-state property management company that can manage all of these tasks in one package! There's no need to hire a separate accountant, maintenance crew, or rent collection specialist when you find all of these roles filled by expert property management services.
This can be a great way for small-scale property owners to quickly ramp up their holdings without the additional expense of payroll—and all the hassles that come with it.
Hungry for More Insight?
Amplify your investing power in 2021 when you learn more tips using our free resources! Get started with our FREE Guidebook for a First Time Investor.
