Every housing market investor or homebuyer faces the possibility of an economic meltdown. It has happened in the past, most notably to thousands of homeowners during the Credit Crisis, and it has the potential to happen again.
1) Keep Cash In Hand And Diversify Your Liquid Fund Sources
One thing you can do to improve your chances of surviving the next real estate slump is to build up your cash reserves and other liquid assets. Make sure you’re not over-leveraged and don’t waste money unnecessarily.
2) Ensure That Your Investment Properties Are Well Maintained Condition
If you’re worried about the possibility of a real estate slump, making your rental properties the best available in the local market is an excellent way to protect your portfolio. Preventative maintenance, property repairs, and critical upgrades are all worthwhile investments.
It is also the right time to establish several banking contacts if you need to borrow funds for future property investments. It’s preferable to go with a local community bank or credit union with experience working with real estate investors.
Get rid of any rental properties that are not doing effectively and maintain just the ones that can withstand the storm in your real estate portfolio. Because property prices are still high, this is the right time to sell investment properties that have appreciated considerably.
Having long-term tenants is one method to guarantee consistent income flow. Take notice of financially secure tenants who would be able to pay rent even if the economy tanked, and talk to them about extending their lease term or renewing their lease before it expires.