What to do if your property value isn’t rising as expected, according to experts

Investing in real estate usually requires investing a large sum of money, but it is also one of the best ways to earn passive income.

If all goes well, some real estate investors may expand their original investment by purchasing additional properties.

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Learn: How to Get Rich in Real Estate Starting with Just $1,000

Now, not everyone is as successful as real estate mogul Barbara Corcoran in investing. And there are a few factors that can turn a real estate investment into a failed venture.

However, if the value of your real estate investment is not increasing at the expected rate, experts advise that there are steps you can take to improve the situation.

“When real estate doesn’t appreciate as expected, you’re in a situation that many first-time investors or house flippers find themselves in,” said Rhett Wiseman, real estate investor and founder of Wiseman Advising LLC and Section8Coaching.com.

He added that the harsh reality that markets are not growing as fast or as well as expected is the risk of buying a property when the primary goal is a quick turnaround or a quick profit.

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

GOBankingRates interviewed several real estate experts. Here’s what they had to say.

Also see what some real estate investors regret most.

Reassessing market conditions

One of the first steps real estate investors should take if their property values ​​are not rising as expected is to assess local market trends.

To do this, Dutch Mendenhall suggests reviewing the latest sales data in your area and housing supply and demand indicators.

“To gain insight, use platforms like USNews, NAR, ATTOMData, Zillow and Redfin,” said Mendenhall, a real estate investor and co-founder of RADD Companies.

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He further said that economic indicators such as employment rates, interest rates and population growth should be monitored.

“Strong job growth and favorable interest rates tend to increase property values,” he said.

Finally, you should compare your property’s performance with similar properties in the area to determine whether the problem is local or a consequence of a wider market situation, he added.

Increase the value of your property

Next, the focus should be on what Mendenhall calls “strategic renovations,” such as high-impact upgrades that include kitchen and bathroom renovations.

Paul Gabrail — real estate investor, founder and host of “Everything Money” — agrees, saying that small details can also make a difference.

“Instead of spending $10 on a lamp from a big-box store, spend $100 on something special,” he said. “Yes, it’s 10 times more (money), but those little things make a big difference if you pay attention to them when you’re renting a property. The landscaping. The cleanliness of the property. Those are all little things that add up and can directly or indirectly lead to more money.”

Other improvements to a property’s appearance could include improving its curb appeal or introducing energy-saving features, which can significantly impact the appeal of potential buyers or tenants.

“Ultimately, this could lead to an increase in property values,” said Rene Lacad, a real estate investor and entrepreneur.

Seek advice from a specialist

One way is to work with real estate agents, appraisers and property managers who will provide professional advice and strategies to increase the value of your property, Mendenhall said.

He also encouraged investors to consider the tax implications they may face. To do so, he said, work with a tax advisor to understand how the property’s performance affects your tax situation and explore strategies to optimize returns.

Think outside the box

If your real estate investment is not currently growing at the rate you expect, look for immediate ways to improve your short-term investment performance and still increase your profits.

According to Alex Blackwood, CEO and co-founder of fractional real estate investing platform Club, ways to achieve this include considering a commercial use for the property, renting it out or creating an accessory dwelling unit (ADU), or even listing the property at a slightly below-market price in hopes of starting a bidding war or finding a way to increase the price of the property when you’re actually ready to sell.

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

Another option is to consider listing your property as a short-term rental, which allows you to “squeeze some income out of your home while you wait for a seller,” said Omer Reiner, a licensed real estate broker and president of Florida Cash Home Buyers.

Finally, several experts emphasized the fact that every real estate investor should think long-term.

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

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