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4 Effective Tactics for Low-Risk Growth as a Real Estate Investor

Palak Shah
2 min read
4 Effective Tactics for Low-Risk Growth as a Real Estate Investor

I started full-time real estate investing with my husband in my late 30s. As parents with a family, we have focused on growing while employing appropriate risk mitigation strategies, because we want to make sure we can provide for our kids during uncertain times. And the current circumstances are proof positive these strategies work.

Whether you are just starting out or trying to scale your rental portfolio, I think you may find some of the ways we’ve run our business useful. Here are four key components to our risk mitigation strategies that have helped us confidently stay the course despite economic volatility.

Risk Reduction Strategies for Real Estate Investors

  1. Maintain Healthy Reserves

When you find a great deal and funds are burning a hole in your pocket, maintaining healthy reserves sounds boring. But setting aside an amount that would cover six months of mortgages and repairs is important as we navigate uncertainties.

Related: How to Build Massive Wealth During a Recession: Master These 5 Principles

And it is never too late to start stockpiling. If your reserves are sparse or nonexistent, begin to save aggressively now.

In addition, each year, we look at our under-performing assets, taking into account the return on equity. We sell the least cash-flowing assets to increase our reserves. This supercharges our strategy while simultaneously increasing our reserves.

  1. Learn to Run Your Business Online

From property management software to virtual showings and walkthroughs, we have been big on running our business online.

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Necessity is the mother of invention. Because I had young children when starting out, it was important for me to be able to do 99% of real estate-related tasks from my phone while with the kids at the playground.

Coincidentally, this has helped us tremendously during times of social distancing. The business operations have not suffered because of the current circumstances.

Related: Real Estate 2.0: How to Exponentially Grow Your Empire With Technology

  1. Focus on Systems and Processes

If there’s one thing I can attribute to being able to run my business in less than three to four hours per day (including acquisitions, construction, property management, and growth), it is focusing on systems and processes.

From the very beginning, I have kept meticulous notes on what worked and what didn’t work. At times, these have been mundane and not useful. Other times, I’ve found gold in these notes.

I have then worked to convert them into repeatable processes and either outsourced or automated them. This allows me to run my business in the leanest possible way, reducing many overhead costs. And that, in turn, allows me to ride the wave of uncertainty with ease.

Young Couple Lying On Carpet Invoice With Calculator

  1. Do Not Over-Leverage Your Assets

Dreaming big and 10X-ing our goals is important for the mindset piece of growth as a real estate investor. But I still maintain a healthy level of equity in my assets.

The Bottom Line

The current situation should have taught us many lessons. One of them is to be well prepared for adversities.

As you build your own portfolio, please keep these four key components of risk mitigation in mind. It is important—now more than ever—to keep our wealth-building process in control and continue building a solid foundation at all times.

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What else do you do to combat adversities in your investing journey?

Let me know in the comment section below.

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.