At its core, the real estate investing business is relatively simple. However, I implore you not to confuse simplicity with ease. A lot of work is required to successfully run a real estate business. But what many people don’t realize is how important the little things are. They are as integral to success as finding a new deal, or even closing on a property. The little things are essentially the foundation of your business. To that end, every real estate investor must have a good grasp on the following aspects of their business if they expect to realize some degree of success:
1. Reputation: The minute you step into the real estate business, your name and reputation are out there for everyone to see. Fortunately, your reputation is one of the few things that you can actually control. The decisions you make and the people you associate with will define your business and the way people view you.
Every new investor desperately wants to close their first few deals as soon as possible. However, no deal is worth ruining your reputation over. Place an emphasis on your integrity, and strive to do the right thing on every deal you are involved with. You will be given the benefit of the doubt from the people around you, and they will want to work with you if they know you have good intentions. Everything thing you do impacts your reputation.
2. Budget: It is easy to get caught up in the business and think you are bigger than you really are. Every investor closed their first deal at one point, and it’s safe to assume they didn’t retire from it. Accordingly, it is important to stay within your means and invest with the cards you are dealt. It will only be a matter of time until you are permitted to work on larger, more lucrative properties. Until then, work within your means.
The minute you go over your budget, you will be forced into working from behind the eight-ball on every other transaction over the course of a project. This will cause you to do things that you may regret, or make decisions you know don’t make sense. Furthermore, you will end up doing the same amount of work for less profit. The goal is not to just close a deal, but rather to have something left over when you are done. Let the numbers guide you, and stick to your budget.
3. Emotion: Real estate investing is very emotional. You are not sitting at a cubicle following orders; your livelihood hinges on the deals you produce. As a result, it is easy to become emotionally attached to whatever it is you are working with. It is never easy to do, but you need to avoid making emotional decisions. The only thing guiding your choices should be the numbers presented in deals. The minute you let emotion cloud your judgement, the greater the chance of a deal going south is.
4. Network: The best way to grow your business is by networking. You may have great success with direct mailing, but direct response campaigns don’t typically increase your network. Even if you have a full pipeline, you will need money to replenish it at some point. Networking is something you should be doing every day. Almost all markets have local real estate investing clubs and networking groups. These are ready-made groups filled with like-minded people looking to grow their business. All you need to do is show up and talk to people to gain some footing. Remember, all it takes is one contact to change the direction of your business. Deals won’t just fall on your lap you need to go out there and get them.