Waiting for Your Next Deal? Here Are 3 Things to Do in the Meantime
One worry I had as a new real estate investor was what to do while I saved for my next property. This may not be an issue if you have ready access to capital, but it might be a concern if not.
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Say you’ve just closed on your first rental and your goal is to pay it off as soon as possible. Maybe you’re hoping to do a rental property debt snowball a la Coach Carson; your “meantime” is one to two years between purchases. Maybe it’s something else. Whatever the reason, if you’re not ready to buy again yet, you don’t have to sit still.
Here are some things to do in between purchasing investment properties.
What Can Real Estate Investors Do in Between Purchases to Better Position Themselves for Success?
1. Continue to educate yourself.
If you’ve been too busy to keep up with the latest real estate investing strategies, knowledge, etc., now is the time to resume studying. Go back to attending real estate meetups regularly, and work on growing your network. Read some recent real estate books, and listen to podcasts.
Approach this strategically. Don’t randomly listen to or read whatever you can get your hands on. Take the time to study your niche or revisit real estate or personal development resources.
Also, delve deeper into your local market or explore an out-of-state market. To learn more about a new market, start by collecting data from sources like the Bureau of Labor Statistics, the Census Bureau’s American FactFinder website, and City-Data.com. Then, cultivate relationships with local real estate agents, property managers, and investors. Signing up for a city- or state-specific BiggerPockets sub-forum is a great step toward building those relationships.
Remember that education builds confidence. It’s also what enables you to act quickly when opportunity strikes.
2. Boost your ROI.
Work to either increase the rent or lower expenses on your current holdings. To figure out which to focus on, review your tax returns or profit and loss statements to see how your properties have been performing.
You could also check in with your property manager to find out about any upcoming repairs or concerns. Then, plan, schedule, and supervise those repairs.
Next, get an estimate of the market rent from your property manager or use a tool such as Rentometer.com to gauge where your rental falls. Adjust the rent accordingly after such an analysis and/or after renovations.
To lower expenses, consider negotiating a lower property insurance rate or shopping for a new insurer. You may be eligible for new discounts. Also, get proper legal protection if you don’t already have it. Consider an umbrella insurance policy on your current rentals or set up an LLC for a future property.
Another option is to challenge your property tax bill. If your bill has risen considerably while property values have remained flat or declined, you may have a strong case for an appeal.
Assessing the health of your current rentals and making appropriate changes can end up saving you hundreds of dollars.
3. Strengthen your personal financial position.
Another thing you can do in between deals is grow your income. This will improve your ability to obtain credit.
Start with your day job. Work hard to hold onto your W-2 job by making yourself valuable. Take on new projects at work; when appropriate, ask for a raise. If you have a side hustle, grow it by marketing your services or taking on extra shifts. Then, use the extra earnings to boost your savings rate.
Next, maintain good credit. Pay your bills on time. Raise your credit limit on cards you max out. Get a free copy of your credit report from AnnualCreditReport.com. Check it for errors, and correct any mistakes right away.
Maintaining good credit and earning more can help you get ahead of potential debt-to-income problems. It can also help you save your down payment quicker or pay off mortgages faster if that is your goal.
Did I leave anything out? What productive activities do you do between deals?
Share in a comment below!