Recessions are an inevitability that no one wants to face, but with the right planning, your real estate business doesn’t have to suffer from a downturn in the market or the general economy. By following these simple tips from real estate expert Joseph Pingaro, you’ll be on your way to recession-proofing your real estate business to weather any economic storms that may come your way.
Save Money Every Time You Make a Sale
Any time you complete a sale, you should be putting away a chunk of cash from that sale into a savings account. Yes, your business should have its own savings account for times such as these, and yes, you should invest in that account every time you make a sale.
As tempting as it can be to run off with all of the money you made on a good sale, if you don’t put any away, you’ll have no financial cushion in the event of a financial downturn. Having even just a few thousand dollars available in a savings account can help you stay on your feet during a recession.
You wouldn’t want to lose your entire business to something like poor planning. Create a savings plan that you can adhere to every time you sell a property. Maybe a specific dollar amount or percentage of the sale goes into your savings account, or at the end of each month, you weigh your profits against your losses and invest a portion of your profits back into a savings account.
Whatever the case may be, having a savings account simply isn’t an option; it’s a necessity for the safety and security of your real estate business. Don’t take unnecessary risks; invest in your business with a savings account.
Focus on Marketing in Slower Times
Slow markets present the perfect opportunity to improve your marketing game. It can be almost easy to convince buyers to pick up properties when the market is hot, but during downtime, it’s much more difficult to do so. This is when you can sharpen your market efforts for maximum results because if you can get someone to buy during a recession, you can pretty much get them to buy any time.
Focus on your digital marketing efforts as well. Are you engaging in social media or other digital marketing campaigns? If not, you should be! Digital marketing is incredibly important to businesses of all kinds, but especially to real estate. You’ll be able to reach thousands of people with a single listing, which is much more effective than a newspaper ad or flyer.
Take the time to study your marketing efforts. Where are they working? Where are they not working? What can you do to improve? Are you reaching our target audience? Do you even know who your target audience is? These questions will help you craft the perfect marketing plan and maximize the success of your efforts, as well as the return on your marketing investment.
Diversify Your Income
During a recession, it’s important to diversify your income stream so you’re not solely dependent on simply selling property to keep yourself afloat. When the real estate market drops, more people rent than purchase homes; increasing the demand for property management services. This can be an effective way to minimize the losses you may suffer from a recession, and provide you with a steady income stream for the duration of the downturn.
Investing is another great way to earn income during a recession. If you purchase a property during a recession, it will likely increase in value once the market improves. Why wouldn’t you buy when prices are low? This is the best time to get ahold of cheaper properties that you can hold onto until the market recovers or rent out during the recession to provide a passive income stream.
One of the most important aspects of survival for your real estate business during a recession is your own personal restraint. It’s important to not panic when things look like they’re taking a downturn. Recessions aren’t permanent, and usually, they only last a few years at most. Some can last as little as a few months!
Keep your wits about you, and don’t panic. Things will return to normal eventually, and as long as you’ve diversified your income streams and invested in a business savings account, you’ll be able to meet all of your personal and business financial obligations during the downturn.
Don’t forget to watch the market on a daily or weekly basis as well. Staying informed is the best way to make good decisions during a recession.
Your real estate business will be well-protected if you follow these simple tips during a recession. Diversify your income, invest in a savings account, and most of all, don’t panic! Recessions pass and markets recover, and if you played your cards right, you can sell off some of your property for a hefty profit once the market recovers.