One of the best things about real estate investing is that anyone can do it. There is no degree or license required to get started. You can invest as little or as much as you like. There is no set amount of time that is needed to be successful. An Investor’s mindset is actually what sets them apart the most.
There are many investors who only have the desire to close a deal every month or so. This can work because they view it as a business. The minute that you start treating it like a hobby, you will start to see some decline. If you want to get the most out of your real estate investing, here are some ways to treat it like a business:
Have systems in place: A business is a business, regardless if you are talking about a local ice cream shop or a large national bank. The amount of time you spend is not nearly as important as the quality of work you put in. Take, for example, a local ice cream truck. They may only be open a few hours in the summer, but even they need a system to be successful. If they are constantly running out of inventory, they will lose their customers. This is the same scenario for your real estate business. You need to have a defined system for what you will do in almost every scenario. Do you know which kinds of properties you want? How will you evaluate new deals that come your way? How are you going to finance your projects? If you react to things instead of having a plan, you will eventually run into trouble. All it takes is one or two bad deals to sour on the business. By having firm, defined systems in place, you can close fewer deals, but be more successful than fellow investors without a plan.
Grow contact list: The hobby real estate investor does not have people to call if something happens on a property. This begins a trickle-down effect of unhappy tenants that may eventually lead to a vacancy. Regardless if you have one property or a dozen, you need to have people you can call in a pinch. The hobby investor waits for the toilet to clog or the dishwasher to break before developing a list. The investor with a business mindset will have a list of plumbers, electricians and handy men ready when they need them. They reach out to them every month, either with a quick email, text or phone call just to stay in touch. When issues pop up, they may even have backups just to be on the safe side. They would rather do most of their work before they ever need it than when they have to. Developing a contact list doesn’t take more than a few phone calls or attending a local networking meeting or two. If you want to get the most out of your business, you need local contacts.
Accounting: You don’t need to be an accountant to run a business, but you do need a firm grasp of the numbers. Every deal you make is filled with expenses, debits, costs and more. To maximize your business, you need to know what each of these numbers mean. Most successful businesses know exactly where their money is going every month. It is those that are caught off guard when issues come up that are left behind. You should have a good idea of what costs you can control, which are fixed and those that can be reduced. Whatever system you have that works for you can be applied to your real estate business. You don’t need to enlist the services of an accountant, but you do need to have an accounting system in place. Businesses revolve around numbers. If you do not know yours, you won’t last very long.
Marketing: The strength of any business is in their ability to generate new leads. Investors who view the business solely as a hobby wait for deals to come their way. They may have one realtor finding them deals but this is often not enough. The investor who views it as a business goes to local real estate investment clubs, networking meetings and is active on social media. You don’t need to spend thousands on a direct mailing campaign to be successful. There are plenty of inexpensive things you can do that don’t take up much of your time. If you do just one thing every week for less than an hour, you will generate new leads to work on. These leads are the lifeline of your business, and will help keep your business moving forward.
Real estate investing can be something you do successfully in your spare time if you treat it like a business. Going from deal to deal or property to property without a plan may work in the beginning, but eventually it will catch up with you. Anyone who has ever dealt with a bad tenant or got involved in a bad rehab project can tell you how important planning is. The number of hours you spend is not as important as what you do with them. Often times it is doing the little things that helps you stay organized and leaves your investing running like a business. Real estate investing is a business and should be treated like one.