Real estate investment can be a highly lucrative career. We’ve all read the stories of young entrepreneurs who become multi-millionaires through real estate investment before the age of 30. Heck, even California’s Arnold Schwarzenegger was a millionaire real estate investor before he ever made it to the big screen.
So what separates successful real estate investors from the rest of the crowd?
Here are seven habits of highly successful real estate investors.
1) Make a Plan
In order to be successful in real estate investment you must treat your investments like a business. You need to have a plan.
Having a business plan allows you to focus on the short-term and long-term goals of your investments without getting distracted.
Take time to look at the market you are investing in. Develop a reasonable timeline for reaching your goals. Get help from a seasoned real estate investor to help you develop an effective strategy for achieving your goals.
2) Know The Market
Study your chosen market(s) and have an in-depth knowledge of the current trends as well as the projected behavior.
Some topics to look into include mortgage rates, consumer spending, unemployment, economic policy, etc..
You want to become an expert on your segment of the market so you can predict changes in trends as well as any opportunities that may arise.
For more information, check out this blog post on how to use U.S. Census data for Real Estate Market Research.
3) Be Honest
As a real estate investor you aren’t necessarily obligated to uphold and strict level of ethical or moral standards.
While it may sometimes be tempting to take advantage of your position as a real estate investor, long-term investors know that it is better to be fair than it is to be ruthless.
If you’re ever faced with a questionable business decision, just ask yourself, “Would my grandma approve of this decision?” If the answer is yes, then you probably have nothing to worry about.
4) Focus on a Niche
Have you ever heard the saying “The riches are in the niches”?
You will have much better results if you focus on a single segment of the market.
Just think about it – if you were going to have heart surgery, would you rather have a doctor whosometimes does heart surgeries or one whose only job is to do heart surgeries? You probably want the doctor who is a specialist.
You want to become a specialist yourself by focusing on a single niche and becoming an expert in your niche.
Spend time getting to know your niche better than anyone else, and use that knowledge to help you make your investment decisions.
5) Invest in an Accountant
Taxes are a HUGE part of real estate investing, and making tax mistakes can cost you thousands of dollars.
Having a reputable and certified accountant can literally save you tens of thousands of dollars in taxes and fees.
Do your research upfront and pick an accountant who has a proven track-record in managing the books for property portfolios.
If there is any expense you don’t want to skimp on, this is the one.
6) Find Help
To succeed, you need to see more than you alone can see. But standing in your way is one of the biggest barriers everyone faces – your ego.
Your brain is wired in a way that prevents you from acknowledging your weaknesses objectively. This is called your ego.
To make smart investments, you must become aware of your ego and find individuals to help you overcome your blindspots.
Whether a mentor, lawyer, or supportive friend, find people who will challenge your thinking and help you make the most effective decisions.
7) Build a Network
Savvy real estate investors understand the importance of a network.
A good network can provide you with the support you need and present you with investment opportunities.
Build a network of mentors, investors, business owners, real estate agents, property managers, and people who can challenge your thinking.
You can get started by looking for local real estate investment groups in your area to connect with.
Here are a few websites that will help you find a real estate investment group in your area:
- Directory of Real Estate Investment Clubs from BiggerPockets.com
- Real Estate Investment Group Finder from ConnectedInvestors.com
- Real Estate Investment Meetups from Meetup.com
The Bottom Line
Real estate investing isn’t something you just get good at overnight. It takes discipline and a long-term commitment before you start to see returns.
Surround yourself with mentors, get to know your market, and never stop investing in your own education.
With enough practice and persistence you will find the success you are looking for as a real estate investor.