A real estate investor explains portfolio stabilization and why it matters for your returns. The core idea: verify that your actual cash flow matches what you projected, so you catch problems before they tank your portfolio.
Foreign. What is portfolio stabilization? Well, it's part of the catapult strategy. Like I said, it's when you take what you've accumulated over the last months, years and amassed enough rental properties to consider it a portfolio. And you may run into a situation where it's slightly overwhelming. You may run into a situation where you've run out of funds or you're not mortgageable at them at this moment. And that could be a good indicator that it's time to stabilize. So what we do in the stabilization phase is what we're going to look to take what we forecasted because a lot of what we do is perform a base, a lot of what we do is calculated guesses and we're going to compare that to the actual returns that we're receiving. Why is the stabilization of your portfolio important? Well, trust but verify. You hear Jaz say this often. It's one thing to go off of the projection numbers or the performer numbers. It's another to know exactly what you're taking in. Our name of our game is cash flow. So if you're not cash flowing, is your portfolio performing? Probably not, right? There's that quote. It's not how much money you make, it's how much you keep. And in this phase of the three part strategy, the stabilization is very crucial for you to then assess the health of your portfolio. Everything looks good. Personally, been there, done that. Everything looks good. Hypothetically, when we first start building our portfolio and our focus is all about accumulation. However, when we move into the stabilization mode, we take our eye off the accumulation and we focus in on what we've attained and we verify, we go into depth, we see where we can improve and see where we're actually making the money that we, we project.
