What To Do If Your Real Estate Is Not Appreciating as Expected, According to Experts

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Investing in real estate generally requires you to put down a good chunk of money, but it’s also one of the best ways to derive passive income.

If things go well, some real estate investors can build on their initial investments by buying additional properties.

Now, not everyone’s investments turn out like real estate mogul Barbara Corcoran’s. And there are several drivers that can turn a real estate investment into an unsuccessful venture.

But if your real estate investment doesn’t appreciate as expected, experts say there are steps you can take to turn things around.

“When properties aren’t appreciating as expected, you have found yourself in a quandary that many first-time investors or newer flippers find themselves in,” said Rhett Wiseman, real estate investor and founder of Wiseman Advising LLC and Section8Coaching.com.

The harsh reality of markets not appreciating as quickly or as well as you anticipated is the risk of buying real estate when quick turnover or a fast profit are your main goals, he added.

“Real estate is a long-term game,” Wiseman said. “When you put money into a home and hope you get it back plus even more, you need the benefit of time.”

GOBankingRates spoke with a few real estate experts, and here’s what they had to say.

Also see the biggest regrets of some real estate investors.

Re-Evaluate Market Conditions

One of the first steps real estate investors should take if their property is not appreciating as anticipated is to assess local market trends.

To that end, Dutch Mendenhall suggests you review your area’s recent sales data and housing supply/demand metrics.

“Use platforms like USNews, NAR, ATTOMData, Zillow and Redfin for insights,” said Mendenhall, a real estate investor and co-founder of RADD Companies.

In addition, he said to monitor economic indicators, such as employment rates, interest rates and population growth.

“Strong job growth and favorable interest rates typically boost property values,” he said.

Finally, compare your property’s performance with similar properties in the area to identify whether the issue is local or a broader market condition, he added.

Improve Property Value

Then you should focus on what Mendenhall calls “strategic renovations,” such as high-impact upgrades including kitchen and bathroom remodels.

Paul Gabrail — real estate investor, founder and host of “Everything Money” — echoed the sentiment, saying small details can make a difference as well.

“Instead of spending $10 on a light fixture from a big box store, spend $100 for something unique,” he said. “Yes, it is 10 times [the money], but these small things make a big difference if you point them out as you lease the property. Manicured landscaping. Property cleanliness. These are all small things that add up and can directly or indirectly lead to more income.”

Other steps to improve your property can include enhancing its curb appeal or incorporating energy-saving elements, which can significantly impact the ability to attract potential buyers or tenants.

“Ultimately this can lead to an increase in the property’s value,” said Rene Lacad, real estate investor and entrepreneur.

Seek Professional Advice

One way to go about it is to work with real estate agents, appraisers or property managers for professional insights and strategies to improve property value, Mendenhall said.

He also urged investors to consider tax implications they might face. To that end, he said, work with a tax advisor to understand how property performance affects your tax situation and explore strategies to optimize returns.

Think Outside the Box

If your property investment is currently not appreciating as expected, look to immediate ways to improve your near-term investment outcome and still boost yields.

Ways to do this include exploring commercial uses for the property, renting it out or setting up an accessory dwelling unit (ADU), or even listing the property at a price that is slightly below market, in hopes of beginning a bidding war or a way to boost the property’s price once you’re actually market ready, according to Alex Blackwood, CEO and co-founder of fractional real estate investing platform mogul Club.

“Alternative operational rental strategies, whether they are long-term or short-term strategies, can generate yield and give you time to wait for the market to turn in your favor,” he added.

Another option is to consider placing the property on a short-term rental site, so you can “squeeze some income out of the home while you wait to get a seller,” said Omer Reiner, licensed Realtor and president of Florida Cash Home Buyers.

Finally, several experts stressed the fact that any real estate investor should have a long-term mindset.

“I teach new investors that, unless they’re doing a flip, they should always have a 10-year time horizon,” said Mason Whitehead, branch manager at Churchill Mortgage. “Real estate, long term, is nearly always your friend. You don’t actually lose money on an investment until you sell it; and, if you don’t have to sell it, you’ll probably be just fine in the long run.”

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