Preparing for difficulties and downturns may not be a popular topic, but it’s an important one. I’m Bob Nelson, Eugene real estate investment broker, with Pacwest Real Estate Investments, and in this brief article we’re going to discuss how planning for the unexpected impacts your real estate investment strategy. This is part six of a six-part series on getting started in real estate investing.
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For those of you who have not started a real estate investment portfolio, early in the year is a great time to write down where you want to go and set some initial goals. Start there, and then expand on it. If you already have a written real estate investment strategy, then set aside some time to read through it, evaluate it, and make sure it still makes sense.
A real estate investment strategy is a long-term strategy. It’s probably good for at least five years, and perhaps even ten to fifteen. It may even be applicable for the rest of your life. The point is to revisit it and revise it periodically. Even though it occasionally needs revisions, it still serves as your written instruction on what you’re doing, how you’re doing it, and how far you would like to go.
Bob Nelson, Eugene Commercial Real Estate Investment Broker:
Writing and revising your strategy also puts you in a position of evaluating risk—examining what happens when things do not go well. Do you currently have the ability to cover shortfalls? if not, think in terms of creating a reserve—some dependable cash that you could tap into just to make sure that you make it through the rough part. Rough parts are a part of life. Even when the market is not affecting you adversely, relationships can have an impact on your investment strategy
As you consider your strategy, always remember that things can happen. You may not know what “the things” are right now, but make sure you have a “things can happen” section in your written plan. By planning for difficulties and downturns, you give yourself the ability to sleep at night. Although you can’t control all the difficulties that may come your way, you can minimize their impact.
The Getting Started in Real Estate Investing Series is from the Bob Nelson and Marica Edwards “Real Estate Today ” Eugene, Oregon, radio show, which airs at 5:30 daily on KPNW.