Over the last few months, I’ve been frequently asked how I intend to approach real estate investing in 2024 and what the “best” strategy is for the coming year.
I want to answer these questions, but unfortunately, it’s not possible. Real estate investing isn’t objective. What markets, deals, and tactics work best for one investor may not work well for another. There is no such thing as “the best strategy”—only “the best strategy for you.”
Given this, I think the best way to share my thoughts on 2024 is to show you how I craft my strategy each year so you can create your own strategy for the coming year. I’ll also show you exactly how I plan to grow my portfolio this year.
When I think about my portfolio strategy, I break it into three different parts:
- Deal design
- Portfolio management
Let’s get into each of these.
Vision details why I invest in real estate, what my goals are, and what resources I can use to pursue those goals. I always start here because if you start with the end in mind, you can work backward on the best way to get there.
Vision is made up of many different variables, but the ones I pay the most attention to are my personal values (why am I investing in real estate in the first place), the resources I want to contribute to my portfolio, my risk tolerance, and my personal financial goals. I think through these elements each year and then visualize them using my Personalized Real Estate Portfolio (PREP) framework.
Having this all clearly laid out in front of me serves as the basis of my strategy. I know what I’m aiming for, what I can and want to risk, and why I’m doing this in the first place.
Once I have my Vision set, I move on to deal design, which is where I narrow down all the great ways to invest in real estate into just those that are aligned with my Vision. Should I flip houses or invest in rentals? Passive or active? Local market or long-distance investing?
These are all great questions to ask yourself. You need to narrow down your list. If you’re constantly thinking about the many options you have, it can overwhelm, confuse, and distract you. So, each year, I take a look at my Vision and decide which types of deals are going to work best for me.
As an example, I am only going to look at long-term rentals and commercial deals in 2024 because flipping is too time-consuming for my Vision. Given that I live in Europe, I will only focus on passive deals.
These are just a few examples of how I narrow down my deal options, but I recommend you think through the eight different categories of deal design shown in this example.
By aligning my Deal Design to my Vision, I am able to focus on the deals that are aligned with my long-term goals and can ignore everything else.
Portfolio management is the last step of setting my strategy and is the most tactical. This is where I do market research, reallocate resources, create an investment thesis for the coming year, and create a buy box.
The first step is to take stock of my current portfolio and how it’s doing. How close am I to my goals? Are all my deals doing well, or are some lagging behind? Am I taking on an appropriate amount of risk?
Before deciding what you’re going to do next year, see where you stand today. This allows you to prioritize your next few moves.
After analyzing my portfolio, I look externally at the market—to macroeconomic conditions and the conditions within the markets I invest in—and determine what deals make the most sense. Are buying conditions good? Should I focus on optimizing my existing deals? By looking at what’s going on around me, I can properly mitigate risk, identify opportunities, and decide what moves will be best for me in the coming year.
Lastly, I take all this research and information and form a plan. This comes in the form of an investment thesis (the guardrails I will follow for the next year), my action plan (the specific things I am going to do, which include, but are not limited to, buying new deals), and of course, a buy box.
After filling out my portfolio management plan, I know exactly what I am going to do in the coming year. I have considered my goals, resources, and current market conditions and decided what makes sense for me in 2024.
Hopefully, showing you my strategic planning process demonstrates why I can’t just tell you the best strategy for 2024—as mentioned, there is no “best strategy”; there is only the “best strategy for you.” You need to take into account who you are as an individual and an investor and decide what real estate investing approach is going to bring you closer to your goals.
For me, that starts with creating a vision, narrowing down my deal designs, and then deciding on portfolio management. Following this process has allowed me to build a successful portfolio for more than a decade, allowing me to live the life I want and to achieve financial independence. I believe it can do the same for you.
If you want some structure and guidance on setting your personal real estate strategy, make sure to check out my new book, Start with Strategy, coming out on Jan. 18. It will help you figure out exactly what type of portfolio is best for you. We’re still in the preorder phase, so if you buy now, you’ll even get a free copy of the Strategy Planner, access to group coaching, and tons of other bonuses.
As always, if you have any feedback or questions, let me know in the comments below.
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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.