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Keys to Keeping a "Healthy" Portfolio and Planning for Volatile Markets


So far this year I’ve talked to you about running a basic check-up on your rental properties, reviewing expenses for cost savings and implementing rent increases in ways that keep you from losing tenants. I think it’s important for us as investors to understand how we can tie all of this together in conjunction with our current property values (now at record highs) as a way to measure the overall “health” of our real estate investment portfolio and maintain a plan for the future. The importance of this tends to be even more abundant during times of volatility in the market. With rising inflation, rising mortgage rates, uncertainty surrounding the economic impact of changes in Fed policy and most recently the rapidly changing geopolitical landscape, it’s possible that we’ll see some amount of volatility enter the market over the coming months and even years. So, whether it’s time to batten down the hatches, take your money and run, or leverage what you have in order to take advantage of new opportunities, you’ll be ready with a level head and positive outlook while everyone else is scrambling to adjust. Some of the keys to executing that are as follows:


  • Know the market rents at your properties and plan rent increases accordingly


  • Recalculate your expenses with added costs like tax increases, utility costs...etc

    • Property Taxes have raised around 15%-20% on average for the 2021 tax year so that will be reflected on the tax bills you are receiving now



  • Have a plan in place should the need or desire for a quick sale present itself

    • If your property is better suited for owner occupants (single family, condo, townhome…etc.), allow for shorter or month-to-month leases

    • If you’d rather not raise rents but find yourself in a pinch later on, think about offering incentives to tenants for a temporary rent increase that will finish out or extend their leases

      • Scenario: Tenant is month-to-month and unable to move right away.

        • Rent is $1600/Month. Cap Rate 4.5%

        • Sign them to 3-month lease at $2130 market rent with $1600 “incentive” off first month. Tenant pays the same amount. Cap Rate now 6.5%+

        • Call for more detail on this but I will talk more on this strategy in future posts


  • Understand your capital gains tax liability and your options to defer or eliminate taxes on these gains:

    • Pay attention to legislative changes as they are proposed and debated

    • Utilize a 1031 Exchange into new property or into a passive income vehicle such as a Delaware Statutory Trust (DSTs)

    • Move into rental and sell primary residence using Sect. 121 Exclusion

      • Exclude up to $250,000 filing single or $500,000 filing jointly

      • Rental now becomes primary residence

      • After 2 years, sell again using Sect. 121 Exclusion

    • Invest gains into a Qualified Opportunity Zone Fund and keep basis

    • I’m working to build a section of the site covering this in more detail so stay tuned!


  • Be prepared to leverage your investments and capitalize on new opportunities!!

    • Any correction in values across the metro area (not likely as of now) will be short lived and will follow mortgage rates so don't miss out if you wish to grow your property portfolio!

    • Start talking with your financial institutions now about setting up a line of credit

      • Best to do while conditions are favorable and equity is highest

      • Most lucrative opportunities come and go quickly

    • Be thinking about utilizing a self-directed IRA to purchase property

The outlook for the real estate market in the Metro Area remains overwhelmingly positive and any volatility that we might see will most certainly be short lived but that never stops people from panicking their way out of great opportunities and/or into bad decisions. In good practice, always keep your investments well insulated, understand your goals and how they might change and do wat you can to avoid reactionary decision making in times of market volatility. As always, if you own too much real estate, or not enough, call me for free sound advice and direction. There’s never any cost or obligation until you’ve made the decision to hire me to help you sell or buy AND I get the job done for you!


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