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The Six Pillars of Real Estate Investing Success

by Michael LaCava on September 16, 2012 · 20 comments

  
pillars of real estate success

I’ve been thinking a lot about “success” recently.

Not only about success in real estate investing, but also success and just plain happiness in general.

No doubt, there’s been a ton written about “the steps to success” in real estate investing. Reading what’s here on BiggerPockets is a tremendous way to learning so many of the skills needed to achieve success in real estate.

There’s been a lot less written about the mindset or what many might call the “the soft skills” that countless self-improvement gurus talk about but many real estate gurus tend to gloss over.

Sure, self-improvement gurus like Stephen Covey, Tony Robbins, Wayne Dyer and Dale Carnegie all teach people how to be successful. Books by Malcolm Gladwell, Richard Branson and Ivan Misner all teach important concepts on success. But how do any of those concepts actually relate to the real estate investor?

The more I thought about it the more I realized that the pillars to success in real estate investing are not altogether different from the lessons those success gurus have been teaching their students for so many years.

Pillar # 1: “Master Your Fear”

There’s no question that one of the most important obstacles to overcome when you’re first investing in real estate is overcoming, then mastering your own fears. Those fears could be fear of failure, fear of loss, fear of the unknown or for many students I’ve had the pleasure of coaching, the fear of “putting yourself out there”.

For anyone who’s just starting out in this business, most don’t realize that one of the most important things to achieving success in real estate investing is mindset. The mindset to overcome your fears and take action is so critical to achieving any level of success in real estate investing or in life. True, real estate investing is not for the faint of heart; and for those who aren’t well suited for it may want to look at other career choices.

However, if you have a deep desire to be a successful real estate investor, at some point you just have to take a stand and say: “Yes, I am going to take charge of my life and do this!”

It wasn’t until I mastered my fears and started to put myself out there; at REIA meetings, at networking events at family functions that I started to gather momentum to any level of success.

Pillar # 2: The 10,000 Hour Rule

Aside from those “get rich quick in real estate” guys we all hopefully avoid like the plague…there is no such thing as “overnight success” in real estate investing. When you start out as a brand-new real estate investor, if you think that you can make your first real estate deal and achieve unbelievable financial success on one deal, you’re deluding yourself. Yes, you might get lucky and make a few bucks, but one thing is for sure you’ll definitely get experience. Experience that will become a part of your 10,000 hours.

As Gladwell says in his book Outliers, the Beatles slaved away in the sweaty, dingy rock clubs of Hamburg, Germany night and day for nearly two years before they achieved their “overnight success” in America.

They were underpaid, their audiences didn’t appreciate them and they slept in the van that brought them to the clubs. In one instance, they slept on top of each other, stacked like cord wood in their back of their van to stave off frostbite, too poor to stay in a motel.

But by the time they reached America, they had played over 1,200 gigs together. And the rest, as they say, is history.

In real estate investing, on-the-job experience, and actually doing it day in day out is all a part of your 10,000 hours.

Pillar # 3: Relationships Are Everything

The old cliché “it’s not what you know – it’s who you know” believe it or not, is actually true in real estate investing! Many of us, myself included, love to toss out timeworn clichés when we lack the vocabulary to express ourselves clearly. These words, as dull as they may sound, are perhaps the ten most important words you could ever learn as a real estate investor.

Sir Richard Branson (a pretty successful real estate investor and sometime owner of very large billion-dollar businesses) states that the key to your success in business is one thing: RELATIONSHIPS . . . period.

Whether it’s finding just the right real estate broker to source your properties, meeting the right private money lender to fund your deals or networking to find just the right contractor to rehab the properties you buy, your relationships make the difference. And to keep those relationships working properly for you, this includes keeping your word, doing what you say, following up with people and being honest and ethical.

Pillar # 4: Giver’s Gain

Picture a cold winter’s night in New England . . . the house is cold, the heat hasn’t kicked in yet and you decide to light a fire in the fireplace. So you step up to your fireplace and say to it: “give me heat!”

It doesn’t quite work that way, does it?

You need to give the fireplace the wood, the kindling, the rolled up newspaper and strike the match. The point is that the fireplace doesn’t give heat to you without you giving to it first.

It’s the same with real estate investing. To be a huge success in the real estate business, always think what you can give to others before you can take anything back in return. This is one of the pivotal concepts of Ivan Misner, the founder of Business Networking International. BNI, which has thousands of local chapters throughout the United States and Canada, base their entire success on this principle. This makes BNI one of the best places to network your real estate investment business and I highly recommend you getting involved.

But the key is you need to give, to get. That’s giver’s gain.

Pillar #5: Focus On Your Strengths

I got a newsflash for you . . . there’s only one you. In my case, (and my wife may agree) thank God!

As Brandon Turner reported here last week, there are over 100 ways to make money in real estate. That is a staggering amount of choices. And I think he’ll agree that there’s probably another hundred that he didn’t put on that list!

Do you know which ones are for you?

If you’re new to real estate investing, that may be a tough question to answer.

You might not know until you actually get started investing in real estate. But once you do, dig deep to find out what kind of real estate investing is the one that’s best suited for your personality, your finances and for your personal situation.

Look in the mirror and figure out as quickly as you can what your top core competencies are and then match those to a certain kind of real estate investing. For me, I like fast moving, constantly changing, quick profit real estate investing. Buy-and-hold real estate investing doesn’t suit my personality. But house flipping does, which is why I do it full-time.

Although there are many “shiny objects” that constantly distract me away from my core competency of house flipping, I do my very best to focus on what I’m good at and block out the other distractions.

Pillar #6: Never Stop Learning

One of the most common traits of all successful people, let alone real estate investors is the thirst for continued learning. From the “multimillionaire next door” private equity investors who helps fund some of my house flips to the most successful real estate investors of national and international notoriety that I’ve had the pleasure to work with, they all have one particular trait in common: they constantly learn new skills and never stop learning.

Whether it’s waking up at five in the morning to devour town tax documents or traveling 2 to 3 weeks a year to attend real estate investing seminars, the most successful real estate investors (and the ones who make millions of dollars a year in earnings) are the ones who are always learning.

You don’t necessarily have to wake up at five AM to study town records, but I would recommend doing your own education, and one of the best way to do this is by finding a mentor. As I stated in my previous post, some of the best mentors and partners can be found just outside your front door.

In fact, some of the most successful real estate investors I know don’t even know that their car radio works because they are constantly listening to self-improvement and real estate investing CDs, podcasts and audio programs to further their knowledge, while at the same time expanding their bank accounts.

Thanks for reading! This is by no means an all-inclusive list, so please leave a comment below to tell me what you think are some additional pillars of real estate investing? I’d love to hear what you think!

Photo: Rachel Sarai

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{ 20 comments… read them below or add one }

Dale Osborn September 16, 2012 at 9:33 am

Great list you have compiled. The last one I keep telling my kids – never stop learning. When you stop learning – it is time to dump the dirt on top of you. Some others that might be added would be to have good negotiation skills and in the end to strive for a win-win-win situation.

Dale

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mike September 16, 2012 at 11:34 am

Thanks Dale
You are correct about negotiating skills and they are very important.
I always strive to create a win-win and beyond that.
Great advice you are giving your kids.

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Dale Osborn September 16, 2012 at 4:09 pm

Building a great team would be another one, but rereading your post – it probably is covered by “relationships are everything”. Perhaps even having a mentor would fall under the same category as well. You have pretty much summed everything up into a great post.

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Mike September 16, 2012 at 9:07 pm

Thanks much on your kind words. You bet that team building is a HUGE part of it all. I’ve been so fortunate to find much of my current team by getting out there and building relationships, as well as meeting plenty of mentors along the way (some of which find my flips as well!) Bottom line is the more contacts you make, the more success you will eventually have. What kind of real estate investing are you doing?

Remi September 16, 2012 at 9:50 am

Great post Mike definitely going to take this into consideration.

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mike September 16, 2012 at 11:35 am

Thanks Remi

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Randy Phillips September 16, 2012 at 10:01 am

That was a very good article, very educational. This guy has skills investing in Real Estate and as a writer. As a beginning investor with some good deals under my belt working on my mind set is a priority, the fear and unknown are constantly raising thier ugly heads. I’m also looking at learning more about salesmanship. Let’s make some MONEY. Rando

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mike September 16, 2012 at 11:42 am

Thanks Randy
I never stop working on my mind set although I have to be reminded from time to time.
Real estate deals can be crazy at times and you can’t always control every aspect if it
Because of other parties involved.
Keep up the investing and would love to hear your about your success.

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page September 16, 2012 at 4:44 pm

” …if you have a deep desire to be a successful real estate investor, at some point you just have to take a stand and say: “Yes, I am going to take charge of my life and do this!”

Having been a real estate investor in the past, I’ve recently had the inkling to get involved again. I just can’t stay away–I love it. Even though I juggle a lot in my other home and business lives, just this week I set a meeting with a local agents whose style I like. I bought lunch and we exchanged ideas–both of us left the meeting with new ideas. This small step has already gotten my ball rolling. You’ve put together a great list in this post.

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Michael September 16, 2012 at 5:00 pm

HI Page
Congratulations for taking that first step again. Keep building on those relationships.
some will turn out great and others not so good but just move on from them and make the better ones stronger. I love what I do every day & hope to inspire others to do the same.
Thanks for reading the post & I always welcome comments or questions so keep them coming.

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Dale Osborn September 16, 2012 at 10:56 pm

Mike – We started out with single family homes – moved into apartment buildings – then one year we had 18 of 43 units go vacant in a Jun-Jul-Aug time frame we were burnt out on apartments. Sold the apartments in Dec 2003 and did a 1031 exchange into a Mobile Home Park and have been enjoying them since that time frame.

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Michael September 17, 2012 at 4:27 pm

Sounds good Dale. looks like you got out in time before the big crash. I have a lot of mobile home parks around where I am from. I am so focused on what is working with the single family flips & rental but I am now starting to look at apartment buildings as I grow the business. Mobile home parks could also be something I look into so maybe I can look you up if I have some questions.

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Gerald September 17, 2012 at 9:43 am

Mike – Great post! I can relate to all six of these pillars. I had to laugh because it’s true, I never thought much about listening to the radio because I’m always listening to some CD or podcast to learn something. I knew I wasn’t the only one, but it feels good to hear someone else say it. Thanks for the shot in the arm this morning.

Gerald

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Michael September 17, 2012 at 4:14 pm

No problem Gerald. We all need that shot in the arm at some point or another.
You certainly never stop learning in this business or any business for that matter.

Mike

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Zack September 17, 2012 at 1:08 pm

Solid! Really like the 10,000 hour reference. If you go into real estate investing with this mindset then you’ll know you need to earn the experience before you earn the big payday.

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Michael September 17, 2012 at 4:22 pm

That is so true Zack. I had my share of cd’s, books, seminars, boot camps, on line coaching….before I jumped in. But nothing beats on the job experience and I have certainly racked up the hours in doing so. I was told I could flip 3 houses a month when I first started & even I didn’t believe that but 4 years into it and I am up to 1 month and very satisfied with where I am at. I go to a lot of REIA meetings and the newbies are looking for a get rich quick pill because of all the hype they are fed. It is a great business and I treat it like a marathon and not a sprint!

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Ivan Misner September 17, 2012 at 4:40 pm

Thanks for your kind words Mike, they are appreciated.

Ivan Misner
Founder
BNI

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Michael September 17, 2012 at 6:46 pm

Thanks Ivan – As a member of BNI for 10 years it is more than words can express. BNI has been instrumental in helping me grow as a business professional, create part of my power team in business (attorney’s,investors,contractors…), and most important has taught me the power of networking & what can be achieved through time tested relationships. I love the piece you did on fast track about the whole time confidence curve. I had to go through that when I started out in Real Estate investing and switched categories about 3-4 years ago and it really helped me to be patient as I had to create new business relationships in my new business. I am happy to share with other’s ways to become successful and this is certainly one of them. Thanks again!!!

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Barbara Brown June 18, 2013 at 9:23 am

Great points! Like any types of “success” real estate investing has a human side, that must be used in all your “transactions.” Unless all parties “win” then the transaction will not go beyond “wham bam thank you mame.” Long term success comes form the “givers gain” mindset that is taught by the networking gurus like Ivan Misner. This is especially true in “short sale” investing. Unless the seller, buyer, and the lender “win” in the transaction, then a short sale seldom goes through.

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Michael June 18, 2013 at 9:38 am

Thanks Barbara. So true about the win-win-win. As a short sale negotiator you know that and that is why you get it done.
Thanks for your comments.

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