As a real estate investor there are days when you just wish you go could back in time and change some of the mistakes you have made. As far as we know this technology hasn’t been created yet, but I’m sure they are working on it. Instead of hopping in your time machine you can take advice from investors who have been in your very same shoes. Almost every successful investor has made decisions they regret. As a new investor you should learn from their mistakes so you don’t make the same ones in your business. Here are six things that all new investors should know.
- Numbers Talk. As you are trying to get your investing career off the ground it is tempting to let your mind wonder. Even though you have an idea of what a good deal is frustration leads you to properties you don’t really want. Soon enough you become attached to a property only because it is the next best thing to hit the market. When you take ownership of the property you quickly realize that they numbers aren’t quite as solid as you thought. The first rule of investing is to always let the numbers be your guide. You can shape and mold the numbers to look like anything you want but unless they are solid the deal will not be profitable. Your goal is not to just close a bunch of deals but to have something to show for them. The numbers will talk to you all you have to do is listen.
- Accept Rejection. While finding your way in real estate there is going to be plenty of ups and downs. Not every marketing option is going to be a home run. Every property is not going to yield a million dollar return. It is important that you have thick skin in everything you do. You can’t be afraid to make an offer you are comfortable with in fears of it getting rejected. The odds are you are going to hear “no” much more often that you will hear “yes”. If you can remain on even keel you be much more successful. Regardless of what happens you need to keep a positive attitude and keep on plugging away.
- Learn To Walk Away. One of the byproducts of listening to the numbers is knowing when to walk away. There are plenty of instances where you will come across a situation that may make sense for another investor but not necessarily for you. Saying no is never easy but it will help you remain focused on your goals. Not only should you let the numbers guide you but you should always revert back to your goals. With everything you do you should ask yourself if your actions are helping get you to where you want to be. By constantly going sideways you can end up taking one small step forward while taking two steps back. There is nothing wrong with passing on a situation or property and waiting for a better time.
- Rehabbing Isn’t Easy. There are currently dozens of shows on TV related to rehabbing and flipping. While most of these shows provide a good educational resource some give an unfair portrayal of the business. What is wrapped up in a 60 minute block for TV often takes months in real life. This process is often grueling and requires plenty of work. As the saying goes if something was easy everyone would be doing it. There is plenty of upward potential in rehabbing but it is important that you know what you are doing. One false step can turn a great property into an average one.
- Money Management. There are a handful of significant changes that comes with being a real estate investor. One of the most common ones is in the manner you earn a living. Many investors come from occupations where you receive a paycheck every few weeks. As an investor you only get paid when your property closes. It could be several weeks, if not months, between deals. When you do close a deal it can feel like you hit the lottery. Even though you receive a lump sum you need to always manage your money. In addition to paying business expenses you need to balance that with your personal expenses. You also need to consider putting money away to pay Uncle Sam when he comes calling. Getting checks at closing is nice but you need to be diligent with how you spend it.
- Constant Education. The real estate business is constantly changing. The best investors are those that stay on top of these changes as they come. Every networking meeting or investment club you attend is an opportunity to learn something new. The more education you have in your tool bag the easier it is to adapt to a changing market. Regardless of whatever else you have going on in your business you need to make time to update your education. You never know when it will come in handy.
You can learn a lot from the mistakes of others. When you are just breaking into the business you should act like a sponge and learn as much as you can. While you can’t go back in time you can do the next best thing and learn from those investors who have been in your very same shoes.
