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Investing in real estate is a fantastic way to build wealth and generate passive income over time. From house hacking to property management, the real estate investment opportunity is vast and multi-faceted, presenting options for investors of all financial backgrounds.
However, there's a big difference between being a real estate investor and being a successful real estate investor. Here are seven habits of successful real estate investors you should know before starting.
Every property should be purchased with clear intentions. It's never a good idea to purchase a property with the mindset that you'll figure it out later. New investors often get sucked into seemingly good deals, but don't have the research to execute a strategy that enhances their ROI.
Plan everything before you buy, from how long you'll hold the property to how much work needs to be completed to sell. Outline the financials and identify how a property fits into your overall investment strategy.
When dealing with real estate, casting a wide net is rarely the best option. Instead, identify your niche and become an expert in your sector. Are you purchasing single-family homes or large multi-family units? Are you entering syndications or flying solo? Are you looking to get into short-term rentals or long-term rentals?
Identifying the area that holds the most interest and potential in your region can help you focus and become successful.
There's a lot you can handle as a real estate investor, especially during the early days. However, having a network of resources and connections is essential for long term success.
For example, you should know how to market your properties if you're handling the sale yourself (see For Sale By Owner Websites Reviewed! Who's #1 in 2020? for more info). You should also connect with reliable contractors, professional cleaners, attorneys, and property managers to build a referral network of trusted experts adjacent to your industry.
There's an idea that dressing for success is the best way to showcase your seriousness. However, the best real estate investors know that there's a time to look flashy and a time to dress down.
When negotiating deals on a property or contracting to rehab an investment, it's better to play it low-key. Driving a reasonable vehicle and wearing business casual clothing can save you thousands over time. The psychology behind this strategy is that dressing in expensive clothing shows that you have plenty of money to work with. Dressing more casually takes away that pre-conceived notion that can impact your negotiations.
As a real estate investor, you should be devoted to continuous learning. Do plenty of primary research— learning at your speed— before investing in courses and books. There are plenty of free resources to get you started. When you invest in continuing education, use it; don't purchase a book and let it collect dust on your shelf.
Real estate investing isn't a get rich quick scheme; it's a long-term business strategy. That's why it's important to play the long game and realize that you might not make a profit for a while. While it's vital to have short-term goals and strategies, you also need to think well into the future when planning.
There are many strategies for investing in real estate. Understanding the various investment strategies will help you navigate market fluctuations over time.
Take the time to understand the nuances between buy-and-hold and buy-and-sell investment strategies. Learn to read the market and tell the difference between a sellers' market and a buyers' market to adapt your investment plans.
With these seven habits of successful real estate investors, you can join the ranks and build a long-term investment strategy that pays dividends.
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