The 5 Keys To Real Estate Investing Success
By JD Esajian on November 2, 2018
There are currently more opportunities in the world of real estate than ever before. Between house flipping, wholesaling, tax lien investing and buy and hold rentals there is a niche for every investor. As abundant as the opportunities are, simply being involved in real estate doesn’t guarantee success. Like any other endeavor there are disciplines, steps, procedures and practices that must be followed in order to achieve your goals. Blindly investing on the advice of a real estate agent or something you may have seen online is a recipe for disaster. Instead of thriving in the business you will be disappointed in your results and soon enough move on to something else. There are literally dozens of things you can do to increase your chances for success, but we have narrowed them down to the five most important. Here are five keys for successful real estate investing.
- Education. It sounds like a corny cliché, but knowledge is power. If you are going to dip your toe in the real estate waters, you need to know everything about what you are getting into. As simply as the business may seem there are plenty of nuances and areas that are difficult to master. Just one false step can turn a profitable deal into one where you are forced to scramble to scratch out a profit. Fortunately, there are most sources for information than ever before. Whatever your learning style may be there is a method for you. The reality is that you will never fully know everything about the business, but you should have a solid of base when you get started. There will be plenty of learning experiences, but you don’t want to learn on the fly. By knowing the business, you will be confident making tough decisions and can greatly accelerate your growth.
- Set goals. If you don’t know specifically what you want out of the business, you will never maximize your potential. You may be able to close a random deal, but you will have trouble building a real business. Your goals will serve as a roadmap and help you with everything from what types of properties to look for to the location to the amount of work needed. It will help you not settle for anything and keep you focused on the bigger picture. Setting goals should be completely individual to you. It is perfectly ok to look for one rental property a year or do one flip every six months. With your goals you should have a coordinating action plan. How are you going to find the deals, who you are going to use to help you and are there any teams members needed? You don’t necessarily need a full business plan, but you should have an outline for what you want to accomplish and how you intend on making it happen.
- Systems. Every successful investor has a system they develop over time. Without a system, investing can be like throwing darts with a blindfold on. Your system should include a blueprint for how you plan on finding deals and marketing your service. You should have a clearly defined idea of the types of properties you want and where you want them. You should know the type of financing you will use and how the numbers work. There should be something in place to help evaluate a deal once a new opportunity becomes available. You should take some time to review the process for whatever niche you are in. If you want to flip houses you need to know step by step what you need to do and who you need to help you. If you want to buy rental property you must understand the process for finding tenants and running a rental property. Every action you take should have a system to help guide you.
- Quality deals only. Your goal as an investor should be to make a profit on every situation. As obvious as this may be, there are times you can get caught up in closing a deal rather than focusing on the bottom line. When you are just starting out it is more important than ever to focus on quality deals only. You aren’t experienced enough to know how to handle even a minor setback without making the problem worse. It is imperative to run your numbers and be disciplined if things don’t work out. Some of the best deals you will ever make are the ones you walk away from. You may have spent a few weeks tracking down the owner and researching the property but if the numbers don’t make sense it is ok to pass.
- Diversify. There is a fine line in real estate between knowing your bread and butter and sticking with something for too long. Every investor has a core market or type of deal they can lean on. What is difficult to measure is when that core will dry up. Any investor around during the foreclosure crisis knows just how quickly things can change. It is essential that you never put all your eggs in one basket and always look to diversify. Not only does this project you against a shift in the market but it may open your eyes to different areas of the business.
Anyone can invest in real estate, but your goal should be to thrive in it. Use these five tips to help give you the best possible chance of success.