Real Cap Daily #13 Top 4 Things To Protect Investments During The Real Estate Correction
We are in a real estate correction. Does this mean a crash, it is unlikely. An adjustment, very likely. What are the top 4 things you can do to protect your investments during this real estate correction?
Hello, my name is Dennis Maynard, CCIM. I am a real estate broker in Los Angeles. Please don’t forget to like, subscribe, and follow.
Real estate is a traditional hedge against inflation. However there are 4 things you can do right now to protect and proceed forward with investments.
1. Keep Low to Moderate Debt Levels. This serves two purposes. It increases your cash flow for expenses and debt service. It also increases your ability to adjust with new cashflow in your account.
2. Use Fixed Rate Long Term Debt. This is subjective to the product type. Smaller mom and pop investors will likely opt for longer term debt to meet their payment needs. Larger investors should adjust from short term debt to 7-year or longer. I recommend and 10-year or more if possible.
3. Don’t Overpay. This may seem like common sense, but gone are the days of chasing deals. Cost of ownership is rising and it will take time to see the changes in the market. It will depend on product type and utility of the investment. Some have suggested seeking deals off-market only. Every property has a price worth paying. This includes deals on market. It is important to remember that rents can and do adjust down from time to time. We are at that point in the cycle.
4. Value Investing - Cash is King. What is the value you are getting from your investments? If you are investing in appreciation, that will likely be flat for the next 5-years as we are in stagflation. Warren Buffett one said, “Price is what you pay. Value is what you get.” Cash is king. Cashflow keeps the kingdom. Investing for cashflow greases the wheels of business to protect against uncertainty. It offers options while competitors options are waining. It pays bills and offers comfort in a time of discomfort.
Are you interested in real estate investments? Real estate is a fantastic way to hedge against inflation and grow your wealth. Even in corrections, there are opportunities. Please reach out, I would be happy to discuss your investment goals and how to get there. Oh, don’t forget to leave your comments below.