In any given market, there are dozens – if not hundreds – of real estate investors. What separates successful investors from the pack are often the little things they do. They know that the little things are important in finding deals but also how they run their business. One wrong decision can have more of an impact than you may think. The most successful investors in any market are those that can make quick decisions they can live with months down the road. In any deal or networking situation, there are a few critical moments that will shape your success. Here are a couple of hidden attributes of successful real estate investors:
- They value their reputation: The real estate business is very much a word of mouth business. The people around you can make or break your reputation. Successful investors understand the big picture. They understand that in this day and age of vast technology, one bad move can have severe damage. It can be very tempting to move into a gray area when you are struggling for deals. You may think you are just going to bend the rules on one deal but the impact is more wide reaching than that. Everyone associated in the deal is judging and evaluating you. Your real estate agent, attorney, contractor, buyer, and seller may be privy to what you are doing. Even if you get the deal to close, you may be branded as someone who will bend the rules to get something done. The people around you don’t want to be associated with someone who can smear their name. Things can often change in the business in a matter of just a few days. Even if things are going well today, you can make them worse by your actions. Your reputation is too important to ruin it over any one deal.
- They stay within their means: If you are in the real estate business long enough, you will eventually get a curve ball or two thrown at you. You may go several weeks without securing a deal and then in the matter of days have three new leads to look at. Regardless of where you are in your business or what you have in your pipeline, you need to stay within your means. Nothing will get an investor in trouble faster than overextending themselves. Even if you have to pass on a property you like to focus on one deal, it’s what you need to do. Successful investors are always watching their bottom line. They know where to spend their money to get maximum returns. It is easy to get carried away on a rehab thinking you will get it all back in the end. It doesn’t always work this way. Those investors who stay within their means and are constantly focused on the bottom line are those that will have the greatest long term success.
- They aren’t concerned with appreciation: The real estate business has undergone many changes over the past decade. One of the biggest changes is with how investors view appreciation. In the past, appreciation was expected. In today’s market appreciation does not happen overnight. Successful investors never base their decisions on the presumption that their property value will rise. If they do the right work, the value will most likely go up, but this should be viewed as a bonus. Investors who are banking on appreciation that doesn’t happen find themselves without options. They may not have enough equity to refinance and don’t see the value in selling. This could cause their capital to be tied up in a property that they don’t really want. Real estate markets and values are cyclical. Most have seen a slow uptick in recent years but are still waiting for a big push upwards. Never buy based solely on appreciation potential. Successful investors understand this.
- They hire professionals: Successful real estate investors understand where they should spend their money. Instead of cutting corners trying to do things they aren’t qualified for, they lean on professionals. Even if you are handy and know what to look for on a property, you are better off using a professional inspector. For a few hundred dollars, they will give you a comprehensive report about the property. This can help provide clarity if you are unsure about whether or not to make an offer. In addition to a professional inspector, they also utilize professional services from real estate agents to contractors and attorneys. There are certain areas where you can save money and investing in qualified professionals isn’t one of them.
- They network all the time. Instead of spending time, money, and effort on direct mailing campaigns, successful investors focus on networking. Wherever you are in your business, you are never too big to stop networking. Good networking will give you access to more deals than you can handle. It will put you in front of people that can help your business quickly take off. Building a solid networking base does not happen overnight. Successful investors have put in the time going to real estate clubs and networking groups. They have pounded the pavement knocking on doors of real estate agents and mortgage brokers. They follow up with every business card they receive and everyone who contacts them. They understand that the next person they talk to could be the one to change their business. Don’t ignore the power of networking.
These are just five of the many attributes that make a successful investor. If you build your business around these five alone, you will see more success in no time.