Make no mistake.
The real estate market will downturn. There will be too much inventory on the market. More people will be jobless. Less people will buy homes. And the average sales price will decrease.
It isn’t a question of “if”, “how”, or “why”, it’s a question of when.
In that turmoil, loads of real estate investing businesses will fail.
Plain and simple.
Will yours?
I don’t know…
But I do know why most real estate investing businesses suffer during a declining market and, more importantly, why some don’t.
Let’s talk about that.
Learn about how Call Porter can help you build a iron-clad business
What most real estate investors expect
Here’s the hard truth.
When the market downturns, some real estate investing businesses will fail. And some will succeed.
Unfortunately, most investors think that the best way to prepare for a struggling market is to… say a prayer, enjoy your bounty now, and “cross that bridge when the time comes.”
And while that’s easy to think when most U.S. markets are booming, a suffering market will create lots of unexpected problems for the unprepared, inexperienced real estate investor.
Typically…
- There will be less demand for houses.
- Buyers and sellers will only work with investors that they REALLY trust.
- And deals will be harder to find.
So what should you do?
How do you build a business that can sustain the impact of a struggling market?
Here are 3 strategies.
1. Build Authentic Relationships
Imagine this for a moment.
The markets downturns. Your business isn’t getting as many leads as it once did. The leads you do get aren’t converting very well. And your business is suffering because of it.
So, you think to yourself, time to call up past leads, send more messages to our email list, and contact friends within your market who might be able to help.
But then you look around and no one’s there to support you.
You’ve spent the last 3 years in an easy market and, during that time, you didn’t build any authentic relationships with the people around you; buyers, sellers, or other investors. You focused purely on profit and did-away with anyone who didn’t immediately benefit your bottom line.
Now you’re alone in a struggling market and your business is failing.
Don’t let that happen.
Take the time to build honest relationships and make an authentic impact in your community. Go to charity events, mail holiday cards to past sellers and buyers, give away free value, visit the same coffee shops over and over again, read the news, comment on the news, become a beacon of positivity, hope, and influence in your market of operation.
That way, when the market crashes, you’ll be surrounded by friends who trust you and are willing to help you.
2. Partner With Other Investors and Agents
In a struggling market, you want to be surrounded by supportive people who can help you win the day.
And I’m not just talking about your leads, prospects, and past customers. I’m talking about other like-minded agents and investors in your market.
Those relationships won’t just provide you with loads of partnership, referral, and masterminding opportunities, they’ll also give you the ability to team up on deals when the market downturns.
When there are less deals to go around, teaming up with other investors can help you survive the market’s lowpoints. But you need to start building those relationships now, not later.
So call and introduce yourself to other real estate pros, join a mastermind, start a Facebook group, or schedule a weekly meetup.
Do whatever it takes to become one of the most well-connected people in your area of operation and you’ll easily survive whatever the market throws at you.
3. Operate in Multi-Industry Markets
Not all markets in the U.S. collapse at the same time.
In fact, the vast majority of market downturns happen statewide, not nationwide. And one of the top causes of a statewide market collapse is a lucrative industry leaving to go elsewhere (or failing altogether).
Imagine Amazon leaving Seattle or Nike leaving Oregon. Those big employers exiting a small city market like that would certainly have a ripple effect throughout the entire state, leaving families without a pay-day and removing income from the state.
Which is why, when choosing your market of operation, you should consider states and cities that have multiple lucrative industries — they don’t depend on just one big player.
That way, if (when) the market does crash, your area of operation is able to sustain it.
Which kind of real estate business are you working to build?
I’m not saying that we’re going to see a great recession anytime soon. In fact, there’s no indication right now that we’ll see that drastic of a downturn in the next few years.
But the market will fluctuate.
Some of those fluctuations will favor the growth of your business. And some of those fluctuations will threaten to dismantle your business.
The only way to survive is to become one of the best businesses in your market, to treat your business like the long-term venture that it is, to collect reviews, to build massive trust, to follow up like crazy, to optimize your sales scripts, and to build a business rather than a side-hustle.
In the end, a struggling market simply separates the wheat from the chaff.
Which is good… if your business is the wheat.