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8 Traits of Successful Real Estate Investors

by James W. Vermillion III on October 7, 2012 · 11 comments

  
successful real estate investors

Take a few minutes to think about the successful people around you, not only financially, but also those who embody personal success. Consider the characteristics each of them possess and how these characteristics have fueled their achievements in their given field. Over the past several years I have come in contact with quite a few real estate investors, both directly and indirectly, and have recognized many I consider to be very successful. These people have not only started successful real estate businesses, they also seem to have mastered balance in their life, a very difficult goal to achieve. I have identified 8 key traits that these investors display, (not surprisingly, this same list can be applied to the leaders in any field):

The 8 Traits that Successful Real Estate Investors Embody

1) Passion for investing: The time and personal equity that is required to become a successful investor is overwhelming for many people, which is why most people who plan on becoming real estate investors fail. Passion fuels drive and drive fuels action; without action the chance of becoming successful is zilch. Passion provides the boost needed for difficult days and enthusiasm on routine days. In short, without passion, real estate investing is just another job.

2) Discipline in decision-making: I have yet to meet someone I would consider both undisciplined and successful, and doubt I ever will. While discipline may be a difficult trait to define, I find it is often fairly easy to pick out, as disciplined people plan for the future, work diligently in the present, and learn from the past.

3) Understanding core principles: Failure is almost certain if you do not understand the foundational principles of business, real estate, and the specific niche you are engaging in. Long term success requires not only an understanding of buying and selling real estate, or how to be a landlord, but also basic economic principles. Understanding market fluctuations, economic cycles, monetary policy and other facets of economics will ensure you can react intelligently when changes do occur. Learning the basics is not always fun or exciting, but it is critical in achieving long-term success.

4) Integrity in business dealings: Real estate is notorious for attracting people looking for a quick buck at all costs, but if you look at successful investors, their success spans years and is attained through incredibly hard work. While it may seem easier to look for a short cut (and rip someone off in the process), a long real estate career must be built on a solid reputation.

5) Flexibility: Murphy’s Law is alive and well in real estate, and to survive inevitable surprises, market fluctuations and bad deals, you must be flexible enough to adapt your plan as you go. Planning is absolutely critical, but equally so is the ability to quickly decide when it is necessary to deviate from the plan. Successful real estate investors know when they need to re-evaluate their current blueprint and make adjustments to preserve the long-term success of their investments and business.

6) Money management skills: Most small businesses fail due to poor money management. Forecasting, budgeting, and financial planning is becoming a lost art among small business owners, and it can be lethal to your business. This is why understanding the basics of accounting, tax law, cash flow management, debt management, and other financial principles is so important, even if you have a great accountant and book-keeper.

7) A Team of Successful People: You can only take your business so far, and at some point you will be forced to rely on other people. Real estate is a people business and every real estate transaction requires a team of people to close. Once a transaction is complete, even more people are involved so it is important to form and maintain relationships with lenders, attorneys, contractors, agents, accountants and other people who can contribute to the growth of your business.

8) Superior communication skills: You have probably heard it a million times but that is because it is true, being able to effectively communicate with other is vital. How else will you be able to negotiate prices, interview contractors, screen potential tenants, partner with others, and so many other daily tasks? Communication goes beyond face to face discussions too, email and text messaging are ever-growing in the life of most business people, and the occasional written note will never go away, so make sure you hone your writing skills as well as your verbal skills.

All investors can say they are involved in real estate, but very few can say they are among the best. Find those whom you consider to be the best and study their habits and practices. Try to understand where they have been and how their skills helped prop them up during difficult times and propelled them during good times. Figure out which areas you have mastered and which you can improve upon; self-realization will lead to positive changes and others will begin looking to learn from you.

Image courtesy of FreeDigitalPhotos.net

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{ 11 comments… read them below or add one }

Joe October 7, 2012 at 8:30 am

Great article James.

“Try to understand where they have been and how their skills helped prop them up during difficult times and propelled them during good times”

Many times the answer to this is what most do not want to hear…. they have an obsessive work ethic and do not stop moving forward regardless of the daily failures.

“Passion fuels drive and drive fuels action; without action the chance of becoming successful is zilch. Passion provides the boost needed for difficult days and enthusiasm on routine days. In short, without passion, real estate investing is just another job.”

While i do agree with this statement, i do not endorse it to most people who will not fully read into it. You can be passionate about a house you just payed too much for, but you will most likely still lose money with it now. Passion is great, but not needed. Many of the most successful entrepreneurs in the world know little about their ventures, they find an opportunity and hire smart people in each department, while they put the pieces together. Again, i agree but must say passion with a bad idea/plan goes no where, be passionate about being successful, not your industry.

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James W. Vermillion III October 7, 2012 at 10:17 am

Joe,

Thanks for the comments. I agree 100% about the work ethic. As for your comments about passion, I think there must be a balance and a passion for both success and what you are doing to attain it. Every successful business owner I know is passionate about being successful, but also the field they have chosen. Of course pure passion can become blinding and can cause irrational decision making and ultimately failure, and is certainly not what I am endorsing.

Most good things have a point at which they can turn negative, even the hard work we discussed early. Balance in both business and personal life is key to long-term, sustainable success.

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Dale Osborn October 7, 2012 at 12:07 pm

Nice set of traits needed to be a success in real estate investing. A few more to add:
1. Self-Motivated: Does not like others telling them what to do. Able to work on their own without any direct supervision.
2. Desire for continuing education: If you do not get an education before jumping in – it could be one big disaster.
3. Focus: Focus is on attaining set goals. Each step required to get there gets done & is checked off.
4. Persistence: Some may refer to it as stubbornness, but once you get started there is no quitting until you reach the set goals.

In my own case there is also Luck: I tell my kids we accidentally stumbled into investing in single family homes. Stumbled our way into apartments and then on into mobile home parks. Without the Luck part, we might not have ever made the move into real estate investing and might still be fat dumb and happy punching a time card making money for someone else.

Dale

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Ziv Magen October 8, 2012 at 1:02 am

Great points James, thanks. I’d argue they ring true for whatever you may set your sights on :)

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James W. Vermillion III October 8, 2012 at 6:12 am

I agree 100%, Thanks Ziv!

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Philip Wade October 8, 2012 at 5:42 am

Interest provides the increase required for difficult times and passion on schedule times. Without passion, property is just another job. Very nicely described. Thanks.

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James W. Vermillion III October 8, 2012 at 6:11 am

Thanks Philip!

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Sharon Vornholt October 8, 2012 at 12:00 pm

Great article James. I think the successful people will hit most if not all of those benchmarks. You will rarely see someone achieve great success that doesn’t.

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Larry Arth October 9, 2012 at 1:19 pm

Great Article, I could not agree more.
I do believe many people miss the all important aspect of creating a real estate investing plan of some sort. Having a detailed written plan and removing the emotions from the process is paramount to succeeding.
One major aspect is The long term plan, Most people i find focus on the acquisition without understanding what the property will do to sustain their longtime goals.

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Ali October 11, 2012 at 7:53 pm

I love it! I think you are spot on. Good reminders of traits of the successful people. If you meet someone who is lacking something major in any of these areas, you might find he/she isn’t what they claim to be. Happens all too often in this industry. But the people with all of these traits, you can pick them out immediately! Like a breath of fresh air.

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Charles Brady November 2, 2013 at 4:08 pm

Wow James another great piece. I can’t believe how fortunate I am to have found Bigger Pockets. I have had so many things reinforced and so many brought to my attention that it is giving a much greater chance for us than had I tried to do it without all the fantastic help.
I’ve seen business men forecast the failure of another business in the past and today I learned what he had recognized; that the niche they were in, they didn’t understand the dynamics of. Even with great financials, good decisions and controls, they were focused on the wrong place in the niche and therefor were going to miss the mark. He was right and it cost the other company about 2.5 million they could ill afford. i will keep these points and put them on the wall, make them part of my business life, thanks.

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