MANGROVE REALTY ASSOCIATES
Lori Madden, MANGROVE REALTY ASSOCIATES
Email: [email protected]

Should I Invest in the Market?

by Lori Madden 11/01/2020

Photo by Edar via Pixabay

You’ve been considering an investment in real estate but are you really ready? Putting your money into something you haven’t done your homework on could be detrimental. You may even have all the tools, but are still straddling the fence. How will you know it’s time? Here are a few signs that indicate you have some ways to go:

Long-term Investment Strategy

If you don’t have one of these, you aren’t ready. Although flipping homes and other elements of getting into the real estate game may seem attractive, all the income coming in is tied to you doing “work.” When you stop doing it, the money stops to. An actual investment strategy means once you’ve found the home, did the work and found the tenants, the income continues rolling in. That means your assets continue to grow year after year.

Finances Need Work

Are your finances in order? That means you’re living below your means and are saving a good amount of your income. How’s your rainy day fund? If you don’t have at least three, six to a year’s worth of expenses that you can quickly get to, investing in something that may not give you a return on your investment doesn’t really make sense.

Insurance

Do you have insurance? It’s important to have at least a term life insurance policy that’s 10 to 12 times your income.

Credit

Unless you have the cash to pay for your investments outright, you need to have a high enough credit rating that allows you to get the financing you’ll need. While your credit doesn’t have to be perfect, it should be good enough and showing indications of improving over time.

Capital

Capital is the name of the game. You should have access to enough capital that will allow you to secure long-term financing to get those properties when you want. Take a look at your risk profile. Purchasing high quality, low-risk property instead of maxing out the capital you have can make a difference. If you don’t have the capital, you’re not ready.

While you’re giving these areas some thought, it’s also a good thing to look at the market. While there are always ongoing talks about a recession, consider the stock market. Which one is riskier? Market stats are usually based on the entire country, but real estate stats are only based on specific cities, properties and neighborhoods. That means even if a recession hits, each property is impacted in its own way.

It’s time to study how to beat a recession if one hits and know the fundamentals. If you have a property that provides significant cash flow now, chances are it will during a recession as well. If you have quality properties in high-demand areas, you can withstand a market downturn. The goal is to make a recession an opportunity if you can. It's time to get things in order. If you purchase the right property in the right area, you’ll be just fine. 

About the Author
Author

Lori Madden

As a Florida native growing up in Sarasota, I have seen my hometown grow from a sleepy coastal town to a highly sought-after destination along the shores of the Gulf of Mexico. After working in Chicago for 5 years, I returned to Sarasota and saw it through a new lens and really began to appreciate what makes Sarasota so desirable, including temperatures that allow for year round outdoor activities including tennis (a personal favorite), golf, boating, kayaking, fishing, paddle boarding, or just relaxing and/or shelling on our pristine sandy shores, including Dr. Beach’s #1 beach in the United States for 2017, Siesta Key! Sarasota’s cultural amenities are many and diverse, appealing to a wide range of arts lovers. Downtown Sarasota has become a destination in itself, drawing many new developments for those who want to be within walking distance of Main Street's offerings and the picturesque bayfront and marina. Foodies will find an eclectic mix of locally owned and operated restaurants offering something for everyone, and there are now Farmers Markets every day of the week in various locations throughout Sarasota, but the Saturday morning Farmers Market in downtown Sarasota draws the biggest crowds. Since 1988, my passion has been selling real estate, representing both buyers and sellers. I have been recognized by my clients and customers for an uncompromising work ethic and dedication to helping them achieve their real estate goals. Relying on my experience as a real estate paralegal and being highly organized, I am able to help make the transition between contract and closing a smooth one for my clients. With an eye for interior and landscape design, I've been known to pitch in and help Sellers minimize and/or reorganize their belongings in order to stage their home to maximize its sale potential. I specialize in out of state buyers looking for their piece of paradise along the Gulf Coast and make it a priority to keep them up to date on our quickly changing local real estate market. I welcome the opportunity to share with you all Sarasota and her surrounding islands have to offer!