Things were going great. You were in a groove, crushing goals, buying properties, or making progress on your first deal. Borrowing money was easy and people were turning great profits.
Then the unthinkable happened: a black swan event. Coronavirus came and wrecked your plans.
The investing world changed overnight. Hard money lending dried up almost completely. Tenants are struggling to make rent. Forbearance became the buzzword. The government offered low interest and forgivable loans to landlords.
You thought, “Wow, this is bad. I better pump the brakes.”
So many investors are sitting back, watching this all unfold and completely sidelining themselves. They are taking a break and assessing the market.
But I have one goal here: to steer you away from this strategy—or complete lack of a strategy. I want to encourage you to not lose your momentum.
Don’t Sideline Yourself
If you sideline yourself any time the market isn’t expanding, you’re going to be out of the game the majority of the time and will most certainly miss many opportunities.
Market cycles are normal, and we will come out of this. Realize that and don’t let it mess with your confidence or derail your plans. Remain cautiously optimistic and position yourself to take advantage of the opportunities that will come from this event and subsequent market downturn.
Those who are fearful will let go of their assets, probably for a lot less than they are worth, providing an incredible opportunity for you. And as other investors take a step back, there will be further opportunities for you to make offers unopposed and without competition.
And I have every reason to step back.
My Ill-Timed Fix & Flip
Back in September, I bought a very high-risk property, planning to flip and sell it quickly in a very affluent area of Nashville. I was freaking out but stoked about the potential. I could make $100,000 on this property, and it would give me the reserves I needed to take my business to the next level.
Things went downhill from there. My contractors got in way over their heads, lied repeatedly, did crappy work, and hid a lot of issues—then walked off the job site. By the time I corrected (most of) the damage they created, my hard money loan term was running out.
I went to refinance since I didn’t yet have a buyer. While waiting for the appraiser to get out to the property, COVID-19 stopped the market in its tracks and the appraised value dropped by $92,000.
I finally got a decent offer and ended up losing $45,000 on the property. That is a lot of money for me, a solopreneur who is experiencing an economic downturn for the first time as an investor. A year ago, I was a stay-at-home mom, dabbling in real estate as not much more than a hobby.
This experience made me want to sell every property in my portfolio, close down my coaching business, and move on to another industry. But then I realized, this experience is not going to break me, it’s not going to define me, but it sure is going to make me stronger, better, and wiser.
It is an expensive lesson, but the most important lesson I learned is that I will overcome that loss and bounce back. What other choice do I have?
Millionaires will come out of this. Those best postured to take advantage of opportunities will snatch up market share and build portfolios they might not have been able to during the expansion phase of the market cycle.
5 Key Ways to Dodge Momentum-Killers
There are a few actions you can take now to keep your business going and create habits that will benefit you during any phase of the market cycle.
- Keep exploring markets. Figure out where you want to invest and start looking hard at opportunities within those markets.
- Continue analyzing properties. Find out what return you are comfortable with and make offers on anything and everything that fits that criteria.
- Build your contact list every single day. Generate productive relationships, add value, and build a network that will elevate your game and catapult you to the next level.
- Refine your KPIs. Focus on being productive and making progress toward your goals by tracking key performance indicators.
- Create good habits now and ride them into the boom. Cut expenses and excess spending, get focused, and develop discipline.
Harness the Power of Momentum
I know I don’t want to come out of this three months or even five years from now thinking, “I’m glad that’s over!”
I want to look back and say, “Wow! I am really proud of myself and the way I overcame those hard times,” knowing that I can and will get through whatever is thrown my way.
Are you working on your business right now? What strategies have helped you?
Let us know in the comments below.