The real estate market is ever-changing. Just consider where we were one decade ago. Methods of investing that worked 10, even 5 years ago, may not work now or over the course of the next year. Real estate investors who fail to recognize and adapt their tactics will be out-performed by more informed competitors.
To continue expanding your investment portfolio, you must constantly educate yourself on industry trends. Following a year that was very strong for sellers, real estate market experts forecast a cool down in 2019. To make the next 12 months profitable, keep these tips in mind.
Build A Financial Cushion
Prepare for the unforeseen by setting aside 6 to 9 months worth of expenses in a separate bank account. If your rental property remains vacant for an extended period of time or repairs are needed, you’ll have cash on hand. You should have separate funds to use toward property purchases.
Maximize Tax Deductions
Maximize write-offs and tax deductions by donating to charities, building a self-directed retirement account, and reinvesting gains. Work with your accountant to restructure portfolios to save even more on taxes.
Reconsider Investment Opportunities
While some investors may plan to take a conservative approach to the cooling market, you have the opportunity to win big by investing in deals that other’s shy away from. While property values will level off in many markets, rent has the opportunity to increase. Don’t let the chatter about a slowing market scare you from making an investment and benefiting from rental income.
Consider Rental Properties
If flipping properties has been your specialty, consider expanding your portfolio to rentals. The housing market will encourage some house hunters to stay in their rental properties for another year, hoping for a decrease in interest rates. If you’ve shied away from holding investment properties in the past, 2019 is your year to explore the rental market.
Explore Opportunity Zone Investments
Opportunity Zones were developed by Congress in 2017 to motivate investment in low-income areas. Investors reap the benefits of tax incentives when they commit unrealized gains into funds that will be used to invest in Opportunity Zones. This map specifies Opportunity Zones across the country.
Focus On Starter Homes
While current homeowners will be reluctant to make a move, first-time buyers will continue their search. Focus on investing in starter homes to attract aging millennials who are ready to buy property.
Evaluate Current Properties
Consider your current portfolio. Is now a good time to sell any of the properties? Is it time to cash in on your equity to prepare to enter a new sector of real estate? Study each area of the market to determine if your return on investing in a new sector is worth the move.
The real estate market may cool off during 2019, but informed investors will know when it’s time to make a move and be willing to explore new ventures. The market is changing rapidly. Use these tips to make the next 12 months a success.