It is difficult to have success in real estate without a good plan. You can have the best intentions and be motivated to succeed but if you don’t know where you are going you will eventually get lost. Investing in real estate is very much like starting a new business. You should have an idea of what your goals are but be flexible enough to know when to change. Whether you are looking for your first property or already have an established portfolio there are a few tried and true tips every investor should follow. These tips will not guarantee success but they go a long way in getting you on your way. Here are four valuable tips every investor should follow.
- Focus On Education. You can never know enough about your craft. The real estate business is constantly changing. The minute you think you have something figured out things change again. It should go without saying but your education is the backbone of your business. Not only will it help you find and close more deals but it will help avoid ones that can get you in trouble. Generally speaking the more educated you are about a subject the more comfortable you are with it. One of the biggest reasons that investors don’t take action is because they aren’t educated enough. They don’t know the structure of the deal, the market, the property or how to interact with the seller. There are many different pieces to closing a deal and getting your offer accepted. You don’t need to be an expert on all of them but you should have a basic understanding of how each of them work. Spend time everyday learning the business and improving your education. The more you know the easier it is to act.
- Make Connections. In a perfect world you will have a new deal to work on as soon as your last one closes. Anyone that has been in the business for some time knows that this doesn’t happen on its own. Keeping your pipeline filled requires constant effort. You can spend time and money on marketing or you can grow through networking and connections. With interest in the real estate business rising there are more people involved than ever before. With this there is more opportunity to meet likeminded people and help grow your business. In most every market there are a handful of local networking clubs. These can consist of local real estate agents, builders, contractors, mortgage brokers and fellow investors. All it takes is one or two new connections to completely change your business. Most markets also have local real estate investment clubs. These are more specific to the real estate investing business. They are filled with people who are closing deals on the local level. Many of them started in the exact same shoes as yourself. These meetings can be intimidating at first but they are invaluable for your business. It is always better and far less expensive generating leads organically through your community than spending money on direct marketing. The better you are at networking and making connections they better your business will be.
- Know Your Market. It amazing that some people spend more time researching what phone they are going to buy rather than the property they are going to live in. As you consider your purchase you need to start by understanding the market. In many respects the market can be just as important as the property itself. The market has a direct impact on the improvements you make, the after repair value, the rent price and the level of demand in the property. You should know about everything about current listings and recent sales. You should also take the time to research where the market may be trending. What are the current foreclosure and employment rates? How much local inventory is available and how many new housing permits were issued in the last six months? You should never be caught off guard by what is going on in your market after you take ownership. Any down time you have should be spent on becoming an expert in your market and knowing everything there is to know about it.
- Quality Over Quantity. You are not judged on the number of deals you close. While there are some external benefits of closing more deals the focus should be on the bottom line. It is always better to pursue quality deals over quantity. By picking and choosing your spots you are able to maximize profit on every deal and greatly reduce your risk. Getting involved in deals with minimal profit can also lead to frustration and the feeling that everything needs to be perfect. There is also the consideration of your time. By spending all of your time and energy trying to squeeze out a small profit on one deal you miss the boat on other, more profitable, ones. The goal is not to take ownership of a property. The goal should be to earn a profit. Whether you do this on one deal a month or just a few a year the end result may be the same. Don’t get caught up looking at the scoreboard chasing deal after deal. Focus on quality deals over quantity.
The real estate business is constantly changing but the process remains the same. By focusing on these four core tips you can succeed in any market.
