Ever wonder what it takes to be successful in real estate investing? Ever wonder if you can do it? I’m here to tell you that you can.
Real estate investing isn’t the easiest thing out there to do, but it can certainly be done. Now is probably an easier time to start investing than ever in the past because of how many resources are available to help you learn it all. I think back to pre-internet days and wonder how in the world people like my grandfather (who was quite the feisty investor) figured out how to invest at all because it’s not like they had easy access to any how-to resources!
Assuming you start learning a niche in real estate investing and pursuing it, what will ultimately make you successful as an investor? “Successful” can obviously have different meanings to different people, but I think it’s safe to assume that we all understand the gist of it. The more successful you want to be, whatever your definition of success is, the more you need to have the following habits of an investor.
To make it as a real estate investor, you need to be able to do the following things.
6 Habits of a Successful Real Estate Investor
1. Overcoming Fear
This doesn’t mean don’t have any fear. You likely aren’t human if you never have at least a little fear while investing. It’s scary to think of losing a huge chunk of money; there’s no shame in that. You can have all the fear you want when it comes to investing, and I would bet that the most successful investors won’t deny having fear themselves, but the trick is in what you decide what to do about the fear. Do you let it hold you back, or do you tell it to take a hike and leave you alone? Or do you do what I do about fear, which is to keep the fear in my back pocket so it keeps me on my toes as I progress with an investment opportunity, but never let it hold me back from actually making the move?
In some cases, you probably should be fearful. If fear is absolutely overtaking you, it may be better to not do the deal, either because that level of fear is so strong that it’s trying to tell you something or you’ll just be miserable with fear if you do go forward — you shouldn’t be miserable with an investment. Assuming you have the correct education in terms of what makes a profitable deal and you find a deal that fits that criteria, you’re going to have to decide if you can tell the fear to leave you alone and let you do the deal. To succeed in real estate investing, you will have to get over some of the fears.
2. Understanding the Math
Whoa, man, is this where people get tripped up! If you’re anything like me, you grew up hearing that if you just own rental properties or flip a house, you’re good! Did you hear the same thing? Even just a few years ago when I first started investing, I was touring some foreclosure properties in Orange County, CA, and I couldn’t figure out why they didn’t seem to make sense as far as how I could profit from them, but I kept thinking that if I just owned them, I should be good. I had no idea about knowing how to calculate cash flow!
Related: 5 Unconventional (& Possibly Crazy) Tips for Real Estate Investing Success
I’m coming from a rental perspective — I can’t speak for flipping — but there are certainly numbers and formulas you need to understand in order to do that successfully as well. In order to earn profit on your investment, you have to know how to work the numbers. Even thinking about it, I just cringe thinking about how few people (relatively) really know that crunching numbers is even a thing. If you do not understand the math behind profitable investment properties, you will never be a successful real estate investor! (Assuming your definition of successful means you don’t lose money.)
3. Learning Constantly
I’m sure you’ve heard this one, but it can’t be emphasized enough. There is a lot to learn to be a successful real estate investor: Everything from learning to crunch numbers, to how to find good investment properties and what to do with them once you have them, to how to analyze risk, to the actual buying process. And that is all just for the physical process of buying an investment property. The mental process of all that is everything I’m talking about in this article — these 6 habits.
Then, what about after you buy your first property? I assume you want to keep going and buy more, right? This is when you have to not only keep trying to learn more, but also make sure you are learning from your mistakes (which you will have; there’s no way around it). Real estate investing is all about the learning, especially since we never had classes in school growing up teaching us how to do it! Wouldn’t it be so much easier if we had? I think so. But we didn’t, so the learning is all up to you. Don’t for a second think you can get away with not continuing to educate yourself if you want to be successful.
4. Resisting Negative Influences
You can go ahead and bet that you will have a majority of folks you are close to trying to warn you off from real estate investing. It just comes with the territory. All I can tell you when you run into this is: take advice only from those people who you would trade shoes with. Period. If the person trying to convince you that investing is dangerous and risky isn’t leading the kind of life you want to lead yourself, take their “advice” lightly.
In my case, I always consider …read more