Holding on in a shaky economy

We talk to lots of investors these days wondering if there’s any future in holding on to their investment properties…or if the risk is just too great. Once they decide to hold, their next question is always “How do we make it work?”

If you were sitting across the desk from me right now, here’s what I’d advise you to do:

1. Be upfront with any investors you might have.
Demonstrate how your experience and expertise (or that of your property managers) will lead you through the tough times.Transparency is critical.

2. Talk to your lenders.
Again, be upfront and open. Let them know exactly where you stand–your cash flow, your anticipated expenses, the risks, everything. Show why you’re confident that you will survive any contingency.

3. Preserve your cash.
 Hold off on any discretionary spending projects. Reduce or eliminate dividends and distributions. Cut operating costs wherever you can.

4. Revamp your business plan.
Revisit your original plan and determine how it adjust it to current conditions. This exercise alone will give you a new view of your path ahead, and force you to re-examine your options. Examine some worst case scenarios, and draw up some strategies you can follow should they come true.

In short, if you are to survive these trying times, you have to open your eyes to what’s really happen, and decide how to outlast it. And finally, be sure you’ve got well qualified  advisors in your corner who know the real estate investment industry inside and out.