A question I get asked a lot is “what are the most common traits of a successful real estate investor?”
I have been in the real estate investment business for a long time and I have experienced a lot of success so I will give you my take on the traits that you need in this post.
Please remember that everyone is different and what works for some people is not going to necessarily work for others. Having said that, I truly believe that if you develop the traits in this post then you will not go far wrong.
Of course developing the necessary traits to become a successful real estate investor is not a one-time thing. You need to be working on these traits every day even if you believe that you have mastered some of them.
There is great power in repetition. I recommend that you make a list of these traits and keep them somewhere that you will see them each day. I am confident that once you master these traits you will experience a lot more success.
The reasons that I have selected these specific traits should become clear as you read the post. I have included examples so that it makes more sense for you.
So here are the 7 traits that I have developed and I believe you should develop too so that you can achieve real estate investment success:
1. Calculated Risk Taker
To be the most successful in property investment you need to take calculated risks. This is very different from gambling on property projects. You need to do your homework and crunch the numbers to make an assessment as to whether a project is worth going for or not.
There is always uncertainty in property investment. House prices change a lot and so do rent rates. Perfect real estate projects don’t exist and you will always find yourself taking calculated risks. If you approach this properly and keep your finger on the pulse then you should be successful with your projects.
Almost all of the properties that I purchase require renovation work to some extent. You will probably be in the same situation and estimating the cost of renovation work can be tricky especially if you are going to use different independent contractors. Take them out to the property before you buy it and ask them to provide you with a quote.
If you want to purchase a single or multi family home then there are a number of rules that you will need to abide by. It is essential that you are aware of these different rules (and any in the pipeline) so that you are not caught out and have to spend money that you didn’t account for to be compliant.
If you are going to use a letting agent to find you tenants and manage your property then find out all of their fees upfront. Also make sure that you are aware of all other costs such as conveyancing and mortgage costs. Create a spreadsheet and use this to calculate the likely return on investment (ROI) for each project.
If you are not prepared to take calculated risks then you are going to miss out on some great opportunities. Never trust someone else’s recommendation. You must work the numbers every time and be comfortable that the project is right for you.
When I first started out in property investment I was not consistent. I used a slightly different approach to each of my property projects and this ended up costing me when I went for a project based on a recommendation rather than systematically go through an assessment process.
Now I used a proven process with all of my property acquisitions. I ensure that we research the property and the location in depth and that we have a good feel for everything. I run the numbers through my system and I will consider all factors such as the mortgage rate, the cost of the renovation work, the demand in the area and so on.
With a consistent approach to property investment you increase your chances of success significantly. Investors are looking at different areas of the country now for the best returns. When you have a consistent system in place you can evaluate an opportunity fast wherever it happens to be.
If you take nothing else away from this post then be sure to work on your consistency. This applies to the way that you act with lenders, tenants, buyers, sellers etc. Stick with what works and be consistent in your approach all of the time.
3. Continuous Learner
You need to know what you are talking about to be successful in the property investment game. Unfortunately there are plenty of agents and sellers out there that will happily take a novice investor for all they have. I have seen people lose a ton of money on property projects that I would not have touched with a barge pole.
Everyone has to start somewhere. I was a novice once, but I was committed to learning everything I could about property investment and become an expert as quickly as possible. I invested in seminars and training courses, went to meet ups and consumed everything that I could about the industry online.
Property investment is always changing. Laws change and councils often come up with new rules and regulations. Property prices fluctuate in different locations and you need to be on top of everything. Reading the posts on this blog is a smart thing to do. There are a ton of other websites out there where you can get solid information for free as well.
I have a great mentor and happily pay this person for their advice and guidance even to this day. It took me a while to find someone that I could really trust and that I knew had more experience than I did. I do not call on my mentor much these days but it is very comforting to know that they are there if I need them.
There is often a lot of waiting time when buying investment property. Don’t waste this time – get online and learn something new about the industry. Find out where the best seminars are and invest in them. There are always new strategies revealed that you would never have thought of on your own.
Being a continuous learner is an essential trait. You can never know everything and if you assume that you do you are making a big mistake. Look at what the successful investors do even if this costs you money. I have spent a lot on my training and still spend today.
One of the things that I found difficult to do when I first started out was to identify below market price properties. There are always under-valued properties around and these make for ideal projects. I attended a seminar and then purchased a training course which helped me to increase my skill levels in this area. Never stop learning.
Are you a patient person? Are you prepared to wait weeks or even months to find the right property project? You may feel that you are under a lot of pressure to move quickly in your property investment business. The old adage “money loves speed” is constantly in your mind. If you don’t act fast then you will miss out on all of the best deals won’t you?
All of these things are true to an extent but it is much better to approach property projects with patience and knowledge. I rushed in and purchased some properties in an area that I was not familiar with in my early days because I was pressured to do this by a friend. How I wish that I had been more patient!
I lost money on the project. It wasn’t my friend’s fault it was mine. I should have checked things out a lot more. But I was keen to get going (as I am sure that you are) and I jumped in head first. It was an expensive mistake to make.
You need to set return on investment goals for your real estate investment business and only act on projects that align with your goals. If this means waiting a while for the right projects to present themselves then so be it.
When you set your goals you will naturally include a timeline for the building of your property portfolio. This is fine but do not let this pressure you into jumping in too fast. If there is not a good project available this month then there may be two next month.
If you are impatient then you need to work on this. You can practice being patient with smaller things in your life and then develop the necessary patience for the investments that you will make. Keep your emotions in check and do not become emotionally attached to a particular property.
5. Good Negotiator
How are your negotiation skills? Do you have what it takes to respectfully stand your ground with sellers until you get what you want – or even walk away from a deal? You need to be a good negotiator as a property investor otherwise you will not get the best deals that you need to maximise your profits.
There are a load of so called “experts” out there that will delight in bullying a novice property investor. Remember that you will have to deal with a number of different people in your real estate investment business. There are agents, private sellers, contractors, lenders and more.
The more that you know about the real estate investment sector the more likely it is that you will develop good negotiation skills. Let’s say that you want to purchase a property that requires a new roof. It is winter time so you should be able to get a discount from a contractor because they will not have as much work on as they do in the warmer months.
There are a number of different strategies that you can choose from in the property investment game. You can go for buy to let, flipping, HMO’s and so on. My advice is to go for one of these strategies and stick with it until you are a master in it.
If you attend a number of seminars there is always the likelihood that you will be introduced to a new strategy where the “grass is greener”. This can be very tempting, but if you don’t have any experience with this strategy then you are more likely to make mistakes. These mistakes can cost you a fortune.
Look at ways to improve your focus. If you have a daily task list (which you definitely should), focus on completing the tasks on the list before you move on to something else. When you are exposed to a new strategy then give it some thought and put it on the back burner until you have achieved your goals with your chosen strategy.
If a new strategy is that good then it will wait a year or so for you to get involved with it. Use your focus to resolve problems that you come up against. Think about the best way to solve the problem and get help if you need it. Solving the problem will provide you with much needed relief and enable you to move forward.
7. Team Builder
Having the right team around you is essential if you want to be successful with real estate investment. I am not just talking about direct employees – there are other people that are going to be involved with your property projects and you need to have the best players that you can find.
It is critical that you know the right people in this game, so find out who these people are and develop a relationship with them. You need to know who the best agents are in the areas that you operate and get to know them really well so that they will tell you about those great deals that come up.
Another example is to have a good relationship with a mortgage broker or a number of mortgage brokers. These people can really help you out. I spent time developing a good relationship with the best contractors in my area and now they are a crucial part of my team.