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Real Estate Business Planning Smarts For 2017

by blogger1
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on Wednesday, 28 December 2016
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2017 promises to be a big year for real estate. How investors, professionals, and business owners plan now will make all the difference in how much they benefit from the opportunities over the next 12 months.

The U.S. real estate market is definitely entering 2017 on a positive and confident note. The overwhelming sentiment is certainly bullish. That also means it is competitive too. There may be some quick wins to be had while the rest of the industry is still getting warmed back up after the holidays. Yet, who reaps the biggest gains and is still surviving and thriving at the end of 2017 will be those than plan well know.

There are clearly lots of good things happening in the markets, and specifically real estate right now. That has some side effects too. Inflation is a big one. It will catch many investors, agents, and real estate business owners by surprise. We’ve already seen interest rates moving up. Three or more rate hikes are coming in 2017 according to the Fed. This alone means things will get more expensive. Life in general will get more expensive for home buyers and renters, and employees. Hopefully it also means more money in the economy to be spent. Still, it is crucial to factor these rising costs into plans in order to stay afloat and on top of your game.

This will come into play in property costs, and the cost of most types of leverage. That can often be balanced out in the market. Then there are other costs. The cost of building materials, gas, marketing materials, and freelance workers. You have to build these escalating expenses into your plans. Otherwise you’ll quickly be upside down, if not at least be experiencing far thinner spreads than projected. This shouldn’t be a big problem for wholesalers. It may be a little more challenging for rehabbers. Even more so for buy and hold landlords.

With this in mind some will find it highly profitable to lock in contracts and even prepay vendors and contractors in advance before the ball drops for 2017. This will not only hold down costs, but may provide additional tax benefits too. Others might be able to negotiate preferred terms with vendors and contractors by going long with engagements. Instead of month by month print marketing look at quarterly and annual deals. Instead of piece by piece with freelancers consider monthly or annual arrangements. You may get them to put in more effort in investing themselves in your success too.

 

Plan well now. Reap the benefits all year.

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