After a year and change of abject isolation in lockdown, Americans are resuming public activities they once took for granted with renewed vigor. With summer in full swing and life slowly but surely returning to normal, a sort of thaw is taking place across the country. This mounting excitement for things to come 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 managers should strive to be – it helps to have a foundation of investment knowledge. So, when clients ask, “What does a second Roaring ’20s 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.)
Everybody’s Got a Price
You’ve heard that saying before. Everything’s for sale if the numbers are right. 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 Just to Hold On
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 ’20s and profited, even using his own residence to do so.
The main idea behind this whole strategy is simply the importance of flexibility in investment. If you’ve meticulously planned the direction of your investments over the next five or 10 years, don’t let that plan keep you from profiting in an unexpected way due to the present reality. Open your mind to the possibility that selling now might provide you with profits you had never even considered.
David Crown is the C.E.O. of Los Angeles Property Management Group, and has over twenty-five years of experience managing all types of income properties. A hands-on leader who has managed properties in 16 states, Mr. Crown has been asked to serve as an expert witness in property management matters, and currently serves on the Forbes Real Estate Council. He can be reached directly at 323-433-5254.