When you listen to real estate investing gurus teach about the tasks to succeed in real estate investing, the topics are normally about the ARV, how to estimate repairs, how to work with hard money lenders, how to get more of the HOW-TO education they offer and I could go on and on… but the topic very few talk or teach is WHO you need to be to successfully do the HOW-TO. And please don’t get me wrong, the HOW-TO are very important but most of them will never be done right if you don’t carry the right mindset to succeed at the highest level.
I came across a wonderful article by Jean Folger on Forbes Magazine Online call Ten Habits Of Highly Effective Real Estate Investors. He breaks down 10 habits needed to be not only a successful but effective real estate investor.
Treat Investments as Businesses
It is important for real estate investors to approach their real estate activities as a business in order to establish and achieve short- and long-term goals. A business plan allows real estate investors to not only identify objectives, but also determine a viable course of action toward their attainment. A business plan also allows investors to visualize the big picture, which helps maintain focus on the goals rather than on any minor setback. Real estate investing can be complicated and demanding, and a solid plan can keep investors organized and on task.
Know Their Markets
Effective real estate investors acquire an in-depth knowledge of their selected market(s). The more an investor understands a particular market, the more qualified he or she will be to make sound business decisions. Keeping abreast of current trends, including any changes in consumer spending habits, mortgage rates and the unemployment rate, to name a few, enables savvy real estate investors to acknowledge current conditions, and plan for the future. Being familiar with specific markets allows investors to predict when trends are going to change, creating potentially beneficial opportunities for the prepared investor.
Maintain High Ethical Standards
Realtors are bound to act according to a code of ethics and standards of practice policy, and real estate agents are held to each state’s real estate commission rules and standards. Real estate investors, however, unless they are associated with membership-based organizations, are not usually required to maintain a particular degree of ethics in their business practices, as long as they operate within the boundaries of the law. Even though it would be easy to take advantage of this situation, most successful real estate investors, and especially those who remain in the business for the long haul, maintain high ethical standards. Since real estate investing involves actively working with people, an investor’s reputation is likely to be far-reaching. In the case of an investor lacking in ethics, the consequences can be damaging. Effective real estate investors know it is better to conduct fair business, rather than seeing what they can get away with.
Develop a Focus or Niche
Because there are so many ways to invest in real estate, it is important for investors to develop a focus in order to gain the depth of knowledge essential to becoming successful. This involves learning everything about a certain type of investment, whether it is wholesaling or commercial real estate, and becoming confident in that arena. Taking the time to develop this level of understanding is integral to the long-term success of the investor. Once a particular market is mastered, the investor can move on to additional areas using the same in-depth approach. Savvy investors know that it is better to do one thing well than five things poorly.
Strive to be Good Customer Service Representatives
Referrals generate a sizable portion of a real estate investor’s business, so it is critical that investors treat others with respect. This includes business partners, associates, clients, renters and anyone with whom the investor has a business relationship. Effective real estate investors are good customer service representatives by paying attention to detail, listening and responding to complaints and concerns, and representing their business in a positive and professional manner.
As with any business, it is imperative to stay up to date with the laws, regulations, terminology and trends that form the basis of the real estate investor’s business. Keeping current does require additional work, but it can be viewed as an investment in the future of the business. Investors who fall behind risk not only losing momentum in their businesses, but also legal ramifications if laws are ignored or broken. When it pertains to the law, ignorance is no excuse. Successful real estate investors take the time and make the effort to stay educated, adapting to any regulatory changes or economic trends.
Understand the Risks
Those choosing to invest in the stock or futures markets are inundated with myriad warnings regarding the inherent risks involved in investing. Numerous agencies, such as the Commodity Futures Trading Commission, require disclaimers to warn potential market participants about the possibility of loss of capital. While much of this is legalese, it has made it clear to people that investing in the stock or futures markets is risky–meaning one can lose a lot of money. Greenhorn real estate investors, however, are more likely to be saturated with advertisements claiming just the opposite: that it is easy to make money in real estate. Prudent real estate investors understand the risks associated with the business–not only in terms of real estate deals, but also the legal implications –and adjust their businesses to reduce any risks.
Invest in a Reputable Accountant
Taxes make up a significant portion of a real estate investor’s yearly expenses. Understanding current tax laws can be complicated and take time away from the business at hand. Sharp real estate investors retain the services of a qualified, reputable accountant to handle the business’ books. The costs associated with the accountant can be negligible when compared with the savings a professional can bring to the business.
Find Help When They Need It
Real estate investing is complicated and requires a great deal of expertise to engage profitably in the business. Learning the business and the legal procedures is challenging to someone attempting to do things on their own. Effective real estate investors often attribute part of their success to others, whether a mentor, lawyer, accountant or supportive friend. Rather than risk time and money solving a difficult problem on their own, successful real estate investors know it is worth the additional costs (in terms of money and ego) to find help when they need it and embrace other peoples’ expertise.
Build a Network
A network can provide important support and create opportunities to a new or experienced real estate investor. This group of associates can be composed of a well-chosen mentor, business partners, clients or a nonprofit organization with interests in real estate. A network allows investors to challenge and support one another, and can aid significantly in advancing one’s career through shared knowledge and new opportunities. Because much of real estate investing relies on experiential-based learning, rather than on reading a book, for instance, savvy real estate investors understand the importance of building a network.
Despite abundant advertisements claiming that real estate investing is an easy way to wealth, it is in fact a challenging business requiring expertise, planning and focus. In addition, because the business revolves around people, investors benefit in the long run by operating with integrity and by showing respect to associates and clients. Tough it may be relatively simple to enjoy short-lived profits, developing a viable real estate investing business that can last for the long-term requires additional skill and effort. Whether focusing on apartment buildings or commercial property, highly effective real estate investors share these 10 essential habits.
Of course the 10 list is not all required, you might have other habits that has helped you be successful but the point is don’t get caught in just gaining the knowledge on the HOW-TO but invest in your BEING.
So what is your thought about the list or what would you add to it?
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