Real Estate Investors: How to Make Smart Moves During Q4 (2023)

About the time football kicks off in Neyland Stadium and across the Southeast each year, the mood in our industry shifts. Many real estate investors and entrepreneurs shift from hustling to coasting through the end of the year.?

In many ways, it’s a well-earned time of rest. But for growth-seeking real estate investors, we could be leaving easy money on the table.?

So take a break from pumpkin carving and tailgating and let’s talk about a few things you can do over the next few months to end 2023 with a bang. And make 2024 your most successful year to date.?

Q4: Buying

Buying rental properties can be a time-consuming venture, so it’s easy to push it to the back burner during the busy holiday season.?

Which is exactly why Q4 can be the best time to find and close deals.?

In November and December, investors often find motivated sellers, and you generally have less competition on the buyer side. This is especially true for cash buyers who can close by year’s end, which presents a range of potential tax and other benefits to the seller.?

When searching for potential investment properties year-round, but particularly in Q4, pay attention to “days on market” which indicates how long the owner has been trying to sell the property. This can be a good gauge (though not fail-proof) for how willing the seller will be to negotiate on price.?

Q4: Selling

If you are executing a savvy tax strategy for your real estate, you may be scheduled to sell a house by the end of the calendar year.?

Tenant-occupied properties (especially under long-term contract) only attract investor-buyers, so your pool of potential clients is much smaller. If you can time your tenant lease end date to coincide with the sale of the property, you open yourself up to a much wider group of owner-occupant buyers. These buyers who intend to live in the property as their primary residence often bring a higher sales price. They also may bring more complications, depending on their funding. Balancing the potential profits with the increased complexities will be important when preparing to sell.?

Q4: Tax Prepping

Real estate taxes can be complicated, depending on whether you are an active or passive investor and whether you qualify as a “real estate professional” by IRS standards. Q4 is a good time of year to compile all of your important documentation and touch base with your CPA or tax professional about any new rules that you should keep in mind for end of year prep.?

One tricky issue I’ve seen a lot of investors get tripped up on is deducting an expense for repairs on their rental property, when the IRS deems the “repair” to be a “capital improvement”, which cannot be deducted in one year.?

I’m not a tax professional, so I won’t dive too deep here. But I am a successful real estate professional, so I can tell you that a tax advisor is one of my top three professional partners when building my real estate team!

If you don’t have a trusted tax advisor, make that a high priority for your end-of-year checklist. Real estate can be a hugely tax-advantaged investment strategy. But as investors, we have to ensure we’re getting the right advice.

Reach out to your local real estate investor network and find out who your peers are using for tax advice…and also who should be avoided. There’s nothing like first-hand experience to help screen for expertise.

Q4: Annual Growth Strategy?

End-of-year planning has been a game-changer for my business. It has created purpose and drive that fuel my daily and weekly focus from Q1 right through the very last holiday party of the year.

Because the best strategies in the world only work if we’re able to take those high-minded plans and use them to shape our daily and weekly activities.?

If you’re looking for new inspiration, here are the four questions I ask myself every December that fuel my planning for the following year:

What is my #1 goal for my real estate next year?

Long-term, most of us invest for the purpose of wealth-building. But in the short and medium term, either cash flow or appreciation are key targets. Knowing whether you need immediate or short-term cash flow from your investments will help you narrow the field of investing options.?

Key team members: who can help me achieve my goal?

Successful real estate investing is not a one-person show. My trusted team of advisors have contributed to my success in real estate as much as my own expertise and tenacity. Here is my starting line-up:

• CPA?
• Banker(s)
• Property manager?
• General contractor (for large-scale projects)

If you still see yourself as a jack-of-all-trades in your investment management, it’s time to bring in some experts. As you think about growing your business in the new year, set a goal to build a relationship with one key player per quarter. By the end of next year, you will be in a better position for growth and development.?

Professional development: what do I need to learn to be a better real estate investor?

Continuous learning is a personal value and something I’ve implemented in my own career. Real estate investing is full of courses and coaches and advisors, so you have no shortage of personal development opportunities.?

But professional development - especially if you’re new to real estate investing - can be as simple as reading a book, downloading a podcast or logging into investor forums.?

A few of my favorites include:

Podcast: Bigger Pockets Podcast

This is an incredible resource that includes deep-dive interviews with investors and experts in nearly every field of real estate investing.?

Book: Tax Strategies for the Savvy Real Estate Investor

The authors are CPAs and real estate investors, so their advice is tried and true. It’s an easy read and worth your time.

Online: Real Estate Investor Forums

Bigger Pockets offers a free account sign-up which gives you access to their massive investor forum site. Here, you’ll see detailed conversations and discussions around strategy and implementation, as well as specific Q & As. Not everyone is an expert! But there is a lot to be learned here. They also host local meet-ups where you can network with other local investors and learn from each other.

Based on my goal, what are my top 3-5 action items for the next year?

If I’m aiming for appreciation of my assets, I’ll evaluate ways to force appreciation through improvements. This will include consultations with my contractor regarding costs, with my CPA regarding tax implications, as well as a review of the market around the property to determine how improvements will be calculated in the property value. Having a good understanding of the current real estate market will ensure you don’t over-improve a property beyond what you can recoup.?

If I’m aiming for cash flow, I’ll evaluate how to add more properties to my portfolio, as well as how to make strategic improvements to my existing properties that will allow for increased rents.?

Either of these goals - cash flow or appreciation - will require us to evaluate our available financial resources. Do you have cash ready to deploy, or will you be looking for a loan? If you’re planning to approach investors, do you have a solid business plan to offer??

Reviewing my answer to question #2 - who can help me achieve the goal - will also be included in my action items. Who do I need to screen and hire??

And finally, incorporating professional development and continuing education will always be a key action item in my planning process.?

Identifying key action items that will support your overall goal gives you daily and weekly action items to tackle, ensuring you make incremental progress on that goal.

Conclusion

Q4 is the perfect time of year to land some big wins and set yourself up for an even bigger year in 2024.

If you’re a residential real estate investor, follow these tips and you’ll be in the perfect position to grow, personally and professionally.

And if you’re looking for a more passive real estate investing option and want to spend your holiday season hanging twinkle lights and fa-la-laing instead of hustling to grab another fixer-upper, give me a call.?

I’m working on a real estate syndication right now that just might be an excellent fit for you.