August 17

Watch and Win!


There may be a lot on your plate as you attempt to sift through a possible downturn in the economy. How will it affect your business? Your income? Your future? It’s a lot to consider, but for a seasoned real estate operator, it’s nothing new. Markets go in cycles. The more you know, the more easily you could navigate times of change. Funny really. We don’t like change, yet the only constant is change. So, we came up with 4 tips you may want to consider, regardless of your economic situation.

Cash flow is king. When good deals come around, it helps if you are prepared to take advantage of them. When the market sours and income slows, it helps to have a reserve to stretch the overhead during slower times. The question is how much is enough, only you and your account can probably answer that question, but suffice it to say, you may want to resist low cash flow positions in the short-term.

Keep your leverage position lower. If you are seeking to acquire new property, you may want to consider how much margin there is in a new purchase. A rental for example with high down payment and little or no positive cash flow may not be a good fit right now. Paying off or paying down more highly leverage assets may also be a good idea to keep the first tip in your quiver healthy.

If it were us, we would avoid anything that was based largely on speculation. Nobody really knows what everyone else is doing or how they will react as the market continues to evolve, especially the government reactions. If your looking at anything speculative, it might be a good idea to see if you can financially afford to weather a long soft period. Do you have the reserves and cash flow to be bullish on a long-term position? If it were us, we would shrink back from more speculative ventures for the time being.

We hope that sharing our opinion above, expressed only as a long-time real estate operator, is taken in the vein in which it was intended. Furthermore, we can not and do NOT offer tax, accounting, financial, legal, nor investment advice.


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