The most successful real estate investors live by a mantra of constant and never-ending improvement. There’s a conviction that one has never “arrived” and is always in a constant state of growth, maturation, and advancement.
No matter how long you’ve been a real estate investor, it’s important to remember there’s plenty more to learn. As you progress in your career and become a smarter investor, here are several practical facets you could focus on.
- Find Your Niche
With few exceptions, there aren’t many real estate investors who are skilled at multiple types of financial ventures. You’ll rarely run across someone who flips houses, buys and holds commercial properties, and develops residential neighborhoods.
There are, however, plenty of investors who are highly successful at one of these endeavors. Generally speaking, you’ll be most successful if you /.0.and focus your energy and efforts there.
This allows you to use all your time learning the ins and outs of that particular strategy. The learning curve is comparatively shorter, and allows you to become a master of your craft.
If you decide it’s going to be low-income rental properties, great! If it’s vacant strip malls, so be it! There’s money to be made in various sectors of this industry. Find your niche and go for it!
- Stay Objective
Successful real estate investors don’t let their emotions get the best of them. Instead, they operate from a perspective of data-driven objectivity.
When you accept an investment opportunity, you should have an understanding of the precise numbers you’re seeking before an offer is ever extended. If it’s a rental property, you should know what your target capitalization rate is.
This allows you to enter into negotiations with confidence. If your number is met and all the other specifics appear to be agreeable, you invest. If the investment doesn’t provide the cap rate you need, you move on … no matter how attractive it seems, otherwise.
- Surround Yourself With the Right People
As a real estate investor, you are the sum of the people you surround yourself with. If you try to operate on your own little island and do everything on your own, you’re eventually going to reach a point where you can’t learn anything further.
But if you surround yourself with talented people who offset your weaknesses and support your strengths, you’re more likely to become a force to be reckoned with. Here are some folks to consider partnering with:
- Property manager: If you own rental properties, it’s a smart idea to find a local property management company to oversee the day-to-day management of your unit(s). This removes a lot of the pressure and allows you to focus on big-picture functions (like finding the next property).
- CPA: Real estate and taxes are intertwined in some pretty complex and sophisticated ways. Retaining a CPA who understands real estate can ensure you get all the tax breaks and credits that are available to you.
- Real estate agent: An experienced agent can find the best deals and help you evaluate which properties are worth your time and when it would be better to avoid them.
- Real estate attorney: Finally, a real estate attorney comes in handy for protecting you, safeguarding your properties, and ensuring all your contracts and legal documents are in order.
The great thing about building a real estate team is that you don’t have to put anyone on the payroll. This is all about forging partnerships with others and paying them for the value they provide. (And if you do a good job of finding decent people, they’ll provide way more value than they charge.)
- Don’t Over-Leverage Yourself
It’s easy to get greedy when the “getting is good.” But every hot market eventually fizzles out, at least for a while. During these periods, you don’t want to get caught with more than you can handle.
“You can be very successful for a long time and still go broke if every rental is mortgaged to the hilt,” experienced investor Corey Chappell explains,
“If you keep some of your rentals free and clear and some of them financed then you’ll have a good mix of safety and still stretching your resources. Do it right, and a few longer-than-expected vacancies or dips in your cash flow doesn’t have to be the end of your career.”
Always be mindful of your debt, equity, and assets. Never become overleveraged, no matter how good the deals appear on paper. All it takes is a couple of bad ones to destroy all the progress you’ve made over the years.
Never Stop Learning
The learning never stops. Whether you’ve been in the business for two months or 25 years, there’s always something new.
The more you focus on improving yourself and adding new skills, the more value you can provide for yourself and others. Use this article as a starting point. And remember that the goal is constant and never-ending improvement!