As the market and economy have recently shifted – and will continue to shift – I have shifted my focus around preparing myself and my businesses for the incoming economic headwind.

Here is my list of six “must do’s” to increase your Real Estate investing “resilience” in today’s climate:

Stop funding anything that doesn’t create cash flow. 

Unless you are in a very stable, abundant financial position, do not allocate dollars to any investment right now that does not create rather immediate cash flow. An investment that does not create cash flow is one that only succeeds when it appreciates (and you sell that asset to capitalize on the earned equity). Banking on appreciation is known as speculation, and speculation represents uncertainty. In today’s environment, lead with cash flow certainty. This applies to more than just financial investment. It also applies to leverage (people you hire in your business), knowledge/education, and other items that represent line items on your P&L. Expect immediate ROI, measured by the amount of free cash that’s created, on all business expenses.

Create liquidity and lots of it.

Distress in the market creates significant wealth opportunities. In order to capitalize on these opportunities, you must be in a cash position to do so. Stockpiling cash in order to seize opportunities, even in an inflationary period, is wise. You will not be disappointed that you lost some “purchasing power” for sitting on idle dollars (i.e. cash just sitting in a savings account and not earning a return) when you buy an amazing asset for significantly less than its true value.

Opt out of involuntary news cycle. 

In times of economic turmoil the vast majority of headlines and breaking news stories, particularly those shared on social media outlets, are negative. It is tough to escape this negativity unless you are purposeful in managing your behavior. Protect yourself and do not get trapped. This does not mean to bury your head in the sand and act like all is good. Instead, be purposeful in what you are choosing to read versus reading the first intriguing headline on your Facebook feed. If you want to understand the status of the labor market, inflation, or the real estate market block time in your day, focus, and study. Read articles and information from reputable sources. Seek out what you’d like to understand that day and take action.

Get clear on your investment vision and make certain it is greater than your circumstances.

When you are clear on your vision and objectives, current circumstances are simpler to overcome. Real estate investment is a long game – one that involves commitment and perseverance. It also requires objective, unemotional decision making. When these decisions are aligned with a bigger picture, present day challenges are just a bump in the road.

Increase the quantity of “deals” you are underwriting.

Making great decisions is a function of the number of options under consideration. So increase the quantity of your options. In other words, when seeking a solid real estate investment, it is simpler to find the right fit when you have a dozen others to compare against. However, when you only have a couple others to compare against your judgment can be clouded.

Understand your investor DNA.

What asset class or real estate strategy do you know best? What type of investments are most interesting to you or are you passionate about? In a challenging financial climate, limiting the scope of your investment strategy and focusing on a few key assets or strategies that are in your wheelhouse is in order.

Author

  • In 2017, Brian and his partners launched Metrix Coaching and Training. The company has coached hundreds of real estate team owners and investors over the past few years as well as facilitated classes and other educational opportunities for tens of thousands of agents across North America. <br> <a href="/about">Read More</a>