Whether the market is up or down, a buyer’s or a seller’s market, there are ways to make money in real estate. In fact, because there is a finite amount of property which can be bought or sold, it is one market that will never fail in the long run. Yes, it may have its ups and downs, but real estate is always in great demand and is usually only affected by the state of the economy which can put a damper on investment capital. Even so, there are certain characteristics that successful real estate investors have in common and these are what new investors should learn to emulate.
1) Honesty and Integrity
If there is one thing many people are leery of, it is a real estate investor who comes across as not being open and above board. There have been so many real estate scams over the years that it is like a breath of fresh air to meet an investor who is openly honest with a high level of integrity. Some of the biggest Ponzi type schemes have been real estate investment schemes and so it is refreshing to deal with investors who are transparent in their dealings with a high level of honesty and transparency.
2) Planning and Strategizing – Long and Short Term Goals
When investing in real estate, it is important to understand that there will always be a few bumps in the road. So as not to get distracted by an occasional drop in the market or other setback, it is important to begin with a farsighted long term goal. Then you can set short term goals to use as stepping stones to your main objective, but don’t become discouraged if things don’t go exactly your way. Every now and again, a stone in your path may become loosened and you may stumble, but remember those stepping stones form the path to your ultimate goal, success, so just pick yourself up and get on to the next goal/step!
3) Research Is Critical – Be More than a Little Familiar with Your Market
It can’t be said enough that you must know your market if you are going to sink money into it. This means both your geographic market and the type of real estate you want to invest in. Are you going to invest in commercial real estate? If so, research what commercial property is selling for in your market area and then look at properties that were listed but didn’t sell. Why did that happen? The more you can learn about your market, the easier it will be to spot good investments when they cross your path.
4) Stay with What You Know – Niche Development Is Central to Success
In keeping with researching your market is niche development. Choose an area of real estate you are comfortable with and develop that niche. Once you have mastered one area of real estate investing, you can move on to the next. It is vital to develop your niche so that you become expert in it. Are you seeking investments in properties with multiple partners such as a real estate group or are you looking to buy properties to hold or sell at a later date? Develop your niche, learn all you can and then you can move on, but not until you master the niche you are in. You never want to be a jack of all trades and a master of none.
5) Keep an Experienced Accountant on Your Payroll
When it comes to investing in real estate, there is one other characteristic every investor should have and that is the intelligence to invest in an accountant! While you may be proficient at math and may understand the basic workings of the tax code, laws do change and there are little things which can save you thousands, if not millions, of dollars and a certified public accountant, CPA, would be up on the latest tax codes that could help you net a higher yield. A good example would be the huge savings you could net on a 1031 exchange property if handled correctly. A 1031 exchange property advisor would also be great to deal with because that is their business, their niche, and they can offer expert advice.
6) Understand Risks Inherent in Real Estate
No investment of any kind is without risks, so don’t go in blindly. Learn about and understand your risks if you hope to succeed. Some new investors panic at the first sign of a problem and that is just a risk you should have learned to deal with. Remember, when you are investing in anything whatsoever, there will be risks. Even so, you can mitigate any losses by understanding potential risks so that you can have a backup plan in effect.
7) Develop Patience and Perseverance
Some new investors, the ones who are prone to panic, need to develop a little patience and a lot of perseverance. Remember, the real estate market is going to react to some extent to the economy and the wise investor knows when to wait it out and when to get out. Patience is a virtue every real estate investor should have.
8) Willingness to Get Help When Help Is Needed
You can’t ever be expected to be all things to all people and you certainly can’t know everything there is to know about everything! When first starting out, find a mentor who can show you the ropes and along the way, be smart enough to know when help is needed. Successful investors always keep a network of experts around them. In this way, help is always available when needed.
9) Build a Strong Network
Speaking of a strong network, a successful real estate investor is going to also be an experienced networker. For more reasons than one, it is critical that you learn to network. The contacts you make will always help define who you are as an investor but will also help you on your journey to success, and vice versa.
10) Stay Informed – Ongoing Education as Needed
As with real estate laws and tax laws, something is always progressing and advancing. Tax laws are notoriously changed without further notice and these can cost you a sizeable amount come April. Whether or not you have an accountant on your payroll, always continue growing and learning so that you can be in a better position to invest wisely.
These are just 10 of the characteristics successful real estate investors possess, but they are among the most critical to your success. Develop these traits and habits of successful investors and watch your portfolio of holdings (and bank account!) continue to grow.