Now that we're a few weeks into the New Year, it's a good time to make sure any resolutions you may have made for 2018 are on track. The goal of a new year’s resolution is to affect real, positive change in our lives. Sometimes we just don’t know where to really start and it’s all-too-easy to get stuck in a resolution rut. We can fall back into vague ideas about being healthier, learning more, earning more, and self-improvement.
But when it comes to real, actionable resolutions and goals, there are plenty of things that real estate investors can do to take their investments—and their passive income—to the next level.
4 Ways to Enhance Your Passive Income in 2018
Revisit Your Systems
Even passive real estate investors rely on systems. While you may not be dealing with the day-to-day operations, you have a way of doing things. You organize the information about your investments and navigate your world in a particular way.
For passive investors, systems come down to the way you deal with your portfolio and streams of income. Are you efficient and effective in the way that you seek out properties, contacts, and records? Consider this: is it a long, stressful, or frustrating process when you need to organize documentation for an accountant?
What about when you want to research a new market or property? Or when you want to find information on a provider or company? It comes down to having the systems and contacts in place that allow you to quickly and easily do what needs to be done.
It doesn’t stop with the big picture processes, either. When you need physical supplies for your real estate business, do you have a go-to that is quick and cost-efficient? Revisiting your systems is thinking about several factors and where you can improve them:
- Time efficiency
- Frustration/stress factor
- Automation opportunities
- Overall organization
No matter what system you’re working within, you want to ensure that you’re minimizing the cost and effort you have to spend while still maximizing the quality and income of your investments.
Rethink What Works
There’s no arguing that the world around us is constantly shifting. Innovations and experimentation are happening all the time. As a real estate investor, you’ve no doubt jumped onto some technological bandwagons in an effort to boost your income and effectiveness. This is the time to step back and rethink things.
Is what you’re trying still the best thing out there? Was it even good to begin with? Just because there’s something new and technologically advanced doesn’t mean that it’s worth using. It doesn’t automatically make it superior or more convenient. When thinking about technology, systems, and methods, think about what you actually use and enjoy.
As an investor, technology should be enhancing your business, not making it more frustrating or difficult. It’s time to rethink why you’re picking the technology you use. Is it because you’ve always done it that way? In that case, step out of your comfort zone this year and see how you might be able to make things more efficient.
Or do you make decisions based on what’s new and most exciting? In that case, our challenge is to step back and, rather than be motivated by keeping up with the Joneses, be compelled by a desire to find what is most effective for you.
Financially speaking, the best thing you can do for your investments this year is to spend less. Saving money is even more important than bringing it in because it better equips you to actually do things with your capital.
Sometimes the best way to increase your passive income has nothing to do with acquiring properties or forcing appreciation and it has everything to do with cutting your expenses. It’s time to look closely at your spending and the motivation behind it. Is every dollar put towards your investments well-spent? Is it going to increase your bottom line? If you have ineffective expenditures, it’s time to make some cuts.
Analyze your return on investments, whether that be on ongoing expenses or one-time renovations. Every investor should be constantly evaluating and challenging their expenses so that no dollar is wasted.
Focus on Quality > Quantity
In real estate investment there’s often a heavy emphasis on gaining as many properties as possible. Growth is a huge factor in success because it helps diversify a portfolio, reduce risk, and increase streams of income. Growth is good! But investors also have to understand that quantity and gaining as many properties as possible as quickly as possible is not the key to success. Growth has to come at the right time.
Quality should take center stage. Even if growth is slow and steady, if what you have is quality and your cash flow is maximized, you’re going to be far more successful in the long run.
This year, focus more on quality. That means being mindful not only of spending but the property and its services. How can you get the most out of what you already have? Maybe it’s in overdue renovations or finding new, better property management.
Whatever you need to do, it’s always better to do the most with what you have rather than to accumulate (and spend) more in an effort to earn.
One of the easiest ways to maximize quality? Start with quality.