There are a lot of skills needed to become a savvy and successful real estate investor. Do you enjoy the challenge, have the time and/or have the comfort with the knowledge and skill needed to be a success? Are you comfortable with investments backed by real estate but do not want to deal with the hassles and time? Here are some of the skills and questions you must ask yourself to find out if active or passive real estate is right for you.
1. Are you a people person – Networking, sales, relationships – Real estate is a relationship business. Investors network, build relationships and are constantly selling themselves. The best investors often seem to be the ones who are well liked and good with people.
2. Negotiations – Negotiation skills are a huge must have in real estate. You cannot be a push over, cannot step on everyone in your way, rather, you must be able to create win-win situations.
3. Willing to put in time and hard work – It amazes me how many people get excited after hearing a speaker and jump into real estate head first. They spend 10 hours then think they are magically going to be handed a hassle free deal and all their dreams will come true. It takes time, hard work, persistence, the ability to improve and the capacity to learn from mistakes.
4. Willing to take risks and overcome comfort barriers – We cannot control the market and many things in real estate. Real estate is an investment because there is risk of loss and also big returns when you’re successful. Real estate investors must do thorough due diligence and acquire comfort taking risks and overcoming challenges. Many investors follow the herd, but the most successful investors do exactly the opposite of the herd.
5. Make it business not personal and emotional – Countless investors fall in love with a deal and act like it is going to be their home. Real estate investing is a business, stick to the numbers and leave the emotions for your personal life.
6. Problem solver – You will be faced with challenges; become a problem solver and face the challenges head on. Most home run deals have big time problems that need to be solved like vacancy, needed repairs, etc.
7. Entrepreneur or Do-it-yourselfer – The most successful investors are or become entrepreneurs. They build systems, teams, delegate tasks and separate themselves from the daily processes in order to make high level decisions and grow the business.
So what is it you are looking to achieve in real estate? Do you enjoy the time, hard work and challenges of a deal? Or are you looking to make great returns without dealing with the hassles? If you are comfortable with investments backed by discounted cash flow real estate, I highly recommend looking to be a passive/private investor with a trustworthy investor with a successful track record. There are tremendous opportunities for passive/private investors as well as active investors in real estate, especially in the current market for the next 3-5 years. Happy Investing!
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Article Author: Ryan MoellerRyan has written 45 articles for us.
Visit Ryan's Website: http://www.realreturnrealestate.com
Ryan is the founder of Real Return Real Estate™ , a company focused on buying property at extreme discounts, selling and renting with cash flow.
Joshua Dorkin
{ 11 comments… read them below or add one }
Ryan -
How would you suggest someone interested in becoming a passive investor get started? What do they need to look for?
Josh, there is a huge need for private money lenders these days. Anyone interested in passive investing should talk to active investors with a successful track record and ask them about their deals and how they could work together. In fact, most of my private investors came to me and asked about my current/past deals and how we could work together. Then we created a win-win situation.
.-= Ryan Moeller´s last blog ..Cash Flow Duplex =-.
How much money would you say someone would need to start with if they were going to go the passive route, then? Is there a minimum you’d recommend?
Great question Josh. To answer that I think it depends on the market, type deals and need for the active investor. For instance, many active investors could use a private investor to help with down payments or to cover repairs. 20% of a deal in a market with low price points such as a 50K deal would only be 10K. I have seen cashflow deals for 30K and less even so 5-6K may do it. Or maybe there is a need for 5-20K in rehab. Other scenarios you could need 150K to fund 100% of a Single Family deal. Expensive areas such as Southern California deals could require 300K+ and commercial certainly could require millions.
So to summarize, 5-10K is enough to become a passive investor on smaller deals and you could find great opportunities for 50K, 200K even millions.
.-= Ryan Moeller´s last blog ..Cash Flow Duplex =-.
If someone can’t pony up $5k for a deal, wouldn’t they be pretty risky to bet on?
Dave, you bring up an interesting point. The 5K was just hypothetical and a private investor must not look at this as a personal loan. The security is the property. A private investor should qualify the deal and make sure they are comfortable with the numbers and risk. It helps to make sure the borrower is trustworthy and has a successful track record and will use the funds appropriately. A personal loan with no collateral is totally different.
Whether a 5K or 5million amount raises a red flag, an investor should always do their due diligence to make the best informed business decision.
.-= Ryan Moeller´s last blog ..Cash Flow Duplex =-.
I think the opportunity to act as a private lender in a real estate deals with an experienced active investor is an often overlooked way of getting started in real estate investing.
.-= Eric Schwager´s last blog ..The Top Ten Investor Mistakes =-.
I agree Eric. They say about 4% of seminar and bootcamp attendees actually implement what they learn. That means over 95% of those people are better off with a passive real estate investment. Especially since they have some real estate knowledge and should be comfortable with an investment backed by real estate.
.-= Ryan Moeller´s last blog ..Cash Flow Duplex =-.
What does a passive investor get in return for investing $10K with a real estate investor? Should the money investor ask for $100 a month plus equity or $200 a month w/o equity? What is the practice. Please do not say it depends or what each wants out of the deal because each may be unreasonable. What are the terms that people are doing deals now using. Thank You.
Hey Frank,
Great question, I hope this answers it. In first position 8-12% is what I see the most. 2nd position 10-15%. I see people asking for equity splits when they are putting up larger sums of money, 100% and usually multiple deals.
.-= Ryan Moeller´s last blog ..Cash Flow Duplex =-.
Ryan, Thank you, This is the type of information I was looking for. Appreciate it. I think I may move into that direction.