The year’s end is near. 2016 is coming to a wrap, and it’s time for real estate investors to start tying up loose ends and preparing for next year. However, just because the year is almost over doesn’t mean that it’s time to relax. In fact, there’s no better time to dive head-first into your business. The end of the year is perfect for revising your real estate strategies, preparing for taxes, preparing for banks and of course calculating your liquidity!!! With that in mind, here are some real estate business tips you’ll want to implement before the ball drops.
Evaluate and Revise your Business Plan
As you approach the end of the year, you need to take a look at your business plan. Evaluate the information in it, and compare it with the statistics from the year. This will allow you to revise so you can eliminate tactics that did not work, change your goals as needed, and readjust the information so that it’s more accurate. This is an important real estate marketing tip, as the more precise your business plan, the easier it is to achieve your goals moving forward.
Prepare for Taxes
The end of the year may not be the end of your fiscal year but for us it is our end of year. However, it may still be the perfect time for you to gather, organize, and prepare for taxes. In addition, by covering this task now, you can free up your schedule for later when you might need to better focus on marketing. So, hire an accountant or purchase a tax software system, gather your receipts, analyze your income, and take care of taxes while you have the availability to do so.
Prepare for Banks
If you are like us you might have some credit lines with a bank or two or three. There are a few things that you need to do for the banks. The first thing each bank will want to see is your taxes (see previous section). The second thing the bank will want to see is a year end balance sheet (or net worth statement). A balance sheet is just simply a compilation of your assets and liabilities used to compute a net worth. We do this on many fronts. We do this for all of our LLC’s which eventually become part of our personal balance
sheet. The next thing that a bank will want to see is an income statement. This is a spreadsheet of your income minus you expenses. Again we will do this for our LLC’s and then factor that into our personal income statement. Having these things ready by late January early February is always a good way to get a head start on the year.
We do this at least once a quarter but you should ALWAYS do this at the end of the year. Liquidity means how quickly you can get your hands on your cash. In simpler terms, liquidity is to get your money whenever you need it. Liquidity also plays an important role as it allows you to seize opportunities. Liquidity is the sum of your cash on hand, availability on HELOCs (Home Equity Lines of Credit), easily cashable instruments such as bonds etc, other bank line availability (including credit cards, be careful here), access to other forms of cash from friends and family etc… If you have cash and easy access to fund and a great deal comes along, then it’s easier for you to seize that opportunity. Again for us we have two different forms of liquidity. We have it in the form of our LLC’s and on our personal side.
Coming out on top for the year’s end may require different tactics from what you use throughout the year. However, these small adjustments to your real estate business can end the year successfully, whether it’s with more sales, more investment properties or a clear and organized path for the future.
Let us know in comments below your thoughts, questions, concerns. We’d love to hear from you!