Don’t Let the New Roaring ‘20’s Pass You By

With life slowly but surely returning to normal, Americans are resuming public activities they once took for granted with fresh appreciation. Increased excitement for the future has extended to the stock market, with experts forecasting a strong rebound to usher in a second “Roaring ’20s.”

Now, in my official capacity as a property manager, I never impose unsolicited, non-managerial opinions or advice on my clients. But as a trusted advisor—which is what I believe all property managers should strive to be—it helps to have a foundation of investment knowledge. So, when clients ask, “What does a second Roaring ’20’s mean for me as a rental property owner?”  I can tell them what I’ve learned over the years about taking advantage of a hot market with minimal investment of time and energy. Smart investors often market properties at times like this when prices run high, and sometimes an easy swing hits a home run. Below are just two examples of how I’ve seen this play out.

(I should add that the current boom isn’t universal in real estate. The seller’s market applies mainly to single-family homes, small apartment buildings and industrial buildings. It doesn’t include office space.)

“Not For Sale” Might Mean “For Sale at the Right Price”

You’ve heard it said before: “Everything’s for sale at the right price.” Savvy investors employ this concept to profit significantly by knowing what their price is, even on a property they don’t necessarily expect to sell. They put a property on the market for 20% more than they know it’s worth because that’s the price they would be comfortable letting it go for.  Sometimes, it’s that easy. I recently spoke with an investor who told me that when he received a full-price offer on a property last month, his response was, “That’s on the market? I had actually forgotten about it.”

Don’t Hold On For Holding On’s Sake

I know a residential property owner who bought a property for $1 million and was determined to hold it until the end of the time, letting its value steadily increase. But an agent walked through his office, saw a picture of the property and said, “Name your price.” Because the agent was one of the most successful in the area, the owner (again, determined to make this his portfolio’s jewel and hold it forever) said, “I’ll take $1.8 million.” He had put just about $15,000 into the property — that’s all. He closed with cash 30 days later for $1.7 million after owning the building for four months. Again, know your price.

Furthermore, I know an investor who actually sold his own home, a house he’d lived in for decades and had no intention of moving out of, because he realized that he could make exponentially more on it than he had thought possible. He recognized the Roaring ’20’s and profited, even using his own residence to do so.

If you’ve carefully plotted the direction of your investments over the next five or 10 years, don’t let your plan keep you from profiting in an unexpected way due to the present reality. The central idea behind all of this is simply the importance of flexibility in investment. Open your mind to the possibility that selling now might provide you with profits you had never even considered.

David Crown is the Chief Executive Officer of Los Angeles Property Management Group and has over twenty-five years of experience managing all types of income properties. He can be reached directly at (323) 433-5254.