There is a lot that goes into completing a successful real estate transaction. Perhaps even more importantly, there are other outside factors that go into running a successful real estate business. Essentially, there are more ways to run a real estate business than you are likely aware of – some good, some bad. If you get caught up in what everyone else is doing, you will drive yourself crazy. While it is easy to get caught up in interest rate adjustments and market trends, sometimes it is just better to take a step back and focus on what you can control. If you learn to stay on top of the little things, everything else will fall into place.
There are plenty of variables when it comes to successfully renting a property. You need to get the right property with the right projected cash flow. You then need to hope you get the right tenants. Instead of hoping that you can find tenants or that they pay every month, take the time to put systems in place that will give you the best chance at success. Don’t jump into the first property you look at and assume it will be a good rental candidate. Look at the numbers and compare them to other area properties. If you are unrealistic with the numbers you plug in, you will be disappointed with the results. Stay focused on what your reality is with every property.
Once you have the right property, focus on the day to day activities instead of looking at the bigger picture. You control what you charge for rent, who does work on the property and when you get any maintenance done. Items like monthly property taxes and even interest rates are largely out of your control. You can complain about a tax increase or you can look to reduce expenses or increase rent to soften the blow as soon as it happens. This may mean adding an amenity or another small upgrade to justify this increase and maximize the value. There is often a fine line between an investor who is struggling, wondering why they aren’t getting more for their property and one that is making a comfortable return. By focusing on areas that you can control, you take a proactive approach and make the best of any situation.
Too many investors obsess about their current equity situation or where the market is headed in their area. Unless you have the home currently listed or are considering selling in the next 60 days, these factors shouldn’t be a chief concern of yours. This is not to say that equity isn’t important, but there is no use worrying today about where your home is going to be five years down the road. All it takes is one worldwide event or a few small shifts with interest rates or loan programs to wipe away years of positive growth. When you do repairs or upgrades, you can think about the future, but even that can be risky. Buyers work in cycles and there is not saying what is appealing now will be so in five to ten years. Think about the future of your property, but don’t go crazy thinking about it. Things often change unexpectedly at the drop of a dime.
In terms of running a business, you need to know every aspect of what is going on at all times. You need to know the interest rates of every credit card, the call rate of every direct mailing, the amount you paid for property maintenance last month and the fee your attorney charged on your last closing. It is surprising to many investors just how much they can save or how more effective they can be if they dig deep into their business. If things aren’t going how you like, look at the areas you can change. You are not married to any one specific way of investing or any one area. You are the CEO, CFO and President of your investing business. You can do with it what you like. Don’t look at what other investors are doing or be content with how things were done. If you focus on every aspect of your business, you will know where you can make changes and what is working successfully.
It is also important to remember that your attorney, realtor, contractor and even accountant work either for you or because of you. They are the professionals and probably know more about their area of expertise than you but you are the final decision maker on everything in your business. They are simply making recommendations for what they would do and not definitive declarations on how something should be done. If you don’t know what you are getting into or don’t agree with it you should ask until you have an answer you are comfortable with. You control what types of deals you buy not your realtor. Your mortgage broker may suggest a loan but that doesn’t mean you have to take it. You control which way your business goes and not the other way around.
The best leaders throughout business know which things they should do themselves and which they should allocate to others. By focusing only on what you can control and what is truly important, you will get much more out of your day and out of your business.