As one of the best and most stable long-term investments in the world, real estate has always been a good choice for hopeful investors, but it doesn't pay off for everyone.
To really be successful in real estate investment, you need to know a few tricks of the trade, including which investments to make and what type of real estate investment to get into. For example, should you go into property management or wholesaling? Or should you take a different investment avenue altogether?
Fortunately, though the field is very competitive, you don't need a degree in finance or investment to become successful. Successful investors (with and without degrees) all share these 10 habits, and you should, too.
1. They Treat Their Investments Like Businesses
Successful real estate investors create strategies and business plans for each of their investments. This allows them to devise plans of action for attainment, repairs, maintenance, and/or resale. With a clear business plan, you can see the big picture and determine whether problems along the way are minor setbacks or whether it's time to cut losses and move on to a better investment. Best of all, treating your investment like a business keeps you organized and gives you the tools to manage multiple investments for the greatest ROI.
2. They Know The Markets They're Investing In
If you want to be a successful real estate investor, you're going to have to research and choose your market very carefully and thoroughly. The better you know your market, the better choices you'll make when deciding where and how to purchase properties within it. Stay on top of business trends, changes in consumer behavior, mortgage rates, unemployment rates, and everything else affecting your market will help you avoid pitfalls and take advantage of opportunities.
3. They Maintain the Highest Ethical Standards
Unlike real estate agents, real estate investors are not always held to a standard code of ethics, aside from what is laid out in local and national real estate law. However, successful investors know that creating a sustainable investment portfolio and real estate business means abiding by strict ethical standards.
Why is this? When you invest in real estate, you work directly and actively with people in a community. Those people talk to one another, and you can quickly gain a reputation that will lock you out of future investments if you don't act accordingly and treat the people you work with in an ethical and fair manner.
4. They Find and Develop a Niche
Developing a niche or particular focus in the real estate market is a great way to avoid becoming overwhelmed and making bad business decisions. If you choose a niche and put all of your time, effort, and attention into it, you'll gain expertise and depth of knowledge that will lead you to the best investment decisions in the market.
Developing your niche involves learning as much as possible about your chosen type of investment, whatever it may be. As you learn and master this part of the market, you can begin to build your investment portfolio and see a positive ROI. Once you've gained mastery, you can then choose to shift your focus and learn about a different niche, adding it to your repertoire of real estate investment. You may also never leave your niche, as it's best to be completely confident and experienced in one part of the market than to be floundering in five.
5. They Focus on Great Customer Service
Successful investors know that their business relies on referrals. If you're going to be a successful and effective investor in real estate, you need to treat the people you work with and for with the utmost respect. Be they clients, colleagues, people renting from you, or anyone else you have a business relationship with, think of them as the customer and give them the best service possible.
Be a good listener. Pay attention to small details. Respond promptly to issues, concerns, and complaints. Stay positive and professional. You'll get a lot more referrals and a lot more business.
6. They Never Stop Educating Themselves
Never stop learning about your market and the field of real estate investment. Stay on top of new legislation and regulations. Watch market trends and learn to predict shifts in market behavior. Staying up to date takes work, but don't look at it as "extra"; look at it as improving your investment strategies and optimizing your return on investment.
Staying current can also keep you out of legal trouble as legislation and regulations get updated. Ignorance is never a valid defense in court. Staying educated and learning how you need to adapt can keep you in better stead financially and legally
7. They Understand Investment Risks
You already know how risky it is to invest in the stock market. In fact, a lot of agencies are required to post disclaimers warning potential investors of the possibility and probability of lost capital. Because of these disclaimers and a general consensus that stocks fluctuate and are never a sure deal, people know about their risks when they invest.
However, the real estate investment market is the opposite. New investors are constantly bombarded with advertisements about guaranteed ROIs, "no-risk" investments, etc. This is dangerous, and to be a successful real estate investor, you need to understand that there are always risks involved in investments of any kind. Understand this and get to know your risks so that you can make the best investment decisions.
8. They Enlist the Aid of a Reputable Accountant
As a real estate investor, a significant percentage of your yearly expenses will be in taxes. Tax laws are complicated, and trying to learn them all yourself is futile. A good accountant not only spent the time and energy for school and certification, but they'll also continue to stay abreast of current tax law and will take care of all of your bookkeeping and accounting needs to keep you clear with the IRS and to save you money wherever possible.
9. They Know When to Ask for Help
Every successful real estate investor was once a new and inexperienced investor. What set them apart from all of the others who tried and failed? A smart and savvy realestate investor will always know when to find and ask for help from someone more experienced than they are.
Whether you seek advice from a mentor, an accountant, an attorney, or a personal friend, keep in mind that every successful real estate investor you know has had to ask for help and advice at one point or another.
10. They Build and Maintain a Network
Having a strong network is essential to success in realestate investment. Effective investors build a group of people whom they can work with and go to when they need help. These people include friends, mentors, colleagues, other investors, clients, nonprofits, and others with realestate interests.
A network lends you support and aid when you need it, as well as advice and recommendations as you build your career and move forward in real estate investment.
In Conclusion
Don't listen to the hype and advertisements you'll see for "no-risk" real estate investments. Instead, follow the examples of realestate investors who've been where you are and who've made successful careers out of real estate investment.