With today’s uncertainties related to the pandemic and its economic challenges, many real estate investors are looking for reliable ways to minimize their risk while still earning a reasonable living. The following tips and ideas are suitable for the novice real estate investor as well as a more seasoned professional who is working to scale a rental portfolio.
Maintain Reasonable Reserves
When business is good, and you find that you have a nice pile of cash at your disposal, remember that it can all change in the blink of an eye. Instead of focusing only on growth and more purchases, take the time to review your inventory and tally up six months of mortgage payments that you are responsible for. Also include a sensible amount for maintenance and upkeep of the properties. If you have no reserve, consider selling off a low performing property and using that money to jump-start your reserve savings.
Take Advantage Of Technology
The Internet and a wide array of software have made it very easy and affordable to run your business online and in a virtual setting. This not only cuts your expenses for a brick and mortar office and allows you to work from home or the location of your choice. So childcare and other family responsibilities are far less challenging. Virtual business is also a great help when there are situations like the global pandemic that we are currently experiencing or other emergencies that could be encountered in your future.
Establish Systems And Processes
Think of the systems and processes that you create as a strong foundation for your business. Taking good notes, keeping records in order, and maintaining up to date files will pay off when you have an issue and daily tasks that will be far less time-consuming. Streamlining every step of your business will save you hours every day and allow you to earn your living with less stress and more free time to enjoy life.
Never Over-Leverage Your Assets
It is essential to dream big, but make sure that you live in the real world. Stay hungry and keep working toward exponential growth but maintain a safe level of equity just in case the worst does happen.
The current pandemic and economic challenges are a potent reminder that low-risk growth is essential for the security of your business and your family. Fast controlled growth feels good, but it carries a more considerable amount of risk. And in most cases, real estate investors need to balance growth and risk for their personal financial security.