The Housing Bubble Burst, But Your Business Doesn't Have To
In order to survive the housing bubble burst, real estate investors need to be reviewing and adjusting their business models regularly.
And, no, short sales or wholesales are NOT a business model. They are exit strategies, and only a piece of your whole business model.
Following are 7 key points to examine, to insure you're running lean and mean to ride the storm out.
7 Tips to Adjust Your Real Estate Investing Business Post Housing Bubble Burst
- Focus on increasing lead generation, while you decrease marketing expenses. The best way to do this is to put more focus on internet marketing, where 80%+ of our clients are searching to buy or sell a house.
- Make every lead count. Make sure your systems are tight, leads get evaluated quickly, with the junk leads culled and the best leads responded to immediately. The housing bubble burst has forced us to get better at running numbers.
- Cut your overhead. Look at your operating expenses, with an eye to each line item. What can be reduced or eliminated? If you're renting an office, can you go smaller or even move to a home office? Back to #1, reduce marketing costs, but NOT at the expense of lead generation. You need the leads to stay in business.
- Decrease your labor costs. Employees cost the most, followed by subcontractors, and outsourced contractors are the least expensive. Either move down the line (subcontracting or outsourcing more), or ask existing employees or subcontractors to take cuts. Most will understand, as people are more eager than ever to hold on to jobs right now.
- Negotiate lower prices with your vendors. They want to hang on to business now too, and are willing to work with customers to avoid losing them.
- Negotiate better terms or reduction in debt with lenders. They're willing to work with customers to keep their assets performing, and they're open to dealing with us, to ensure we can stay afloat and houses get sold.
- Make sure your model is maximized for reducing risk and maximizing upside, regardless of your niche.
How Long Before Home Values Recover?
House values are correcting, for sure, but we know that they'll come back up eventually. When? The experts differ on their opinions, but all agree house values will come back up in the long run.
Short term, we likely won't see wild fluctuations, but rather flat home values instead.
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