Ever wonder what it takes to be successful in real estate investing? Ever wonder if you can do it? I’m here to tell you that you can.
Real estate investing isn’t the easiest thing out there to do, but it can certainly be done. Now is probably an easier time to start investing than ever in the past because of how many resources are available to help you learn it all. I think back to pre-internet days and wonder how in the world people like my grandfather (who was quite the feisty investor) figured out how to invest at all because it’s not like they had easy access to any how-to resources!
Assuming you start learning a niche in real estate investing and pursuing it, what will ultimately make you successful as an investor? “Successful” can obviously have different meanings to different people, but I think it’s safe to assume that we all understand the gist of it. The more successful you want to be, whatever your definition of success is, the more you need to have the following habits of an investor.
To make it as a real estate investor, you need to be able to do the following things.
6 Habits of a Successful Real Estate Investor
1. Overcoming Fear
This doesn’t mean don’t have any fear. You likely aren’t human if you never have at least a little fear while investing. It’s scary to think of losing a huge chunk of money; there’s no shame in that. You can have all the fear you want when it comes to investing, and I would bet that the most successful investors won’t deny having fear themselves, but the trick is in what you decide what to do about the fear. Do you let it hold you back, or do you tell it to take a hike and leave you alone? Or do you do what I do about fear, which is to keep the fear in my back pocket so it keeps me on my toes as I progress with an investment opportunity, but never let it hold me back from actually making the move?
In some cases, you probably should be fearful. If fear is absolutely overtaking you, it may be better to not do the deal, either because that level of fear is so strong that it’s trying to tell you something or you’ll just be miserable with fear if you do go forward — you shouldn’t be miserable with an investment. Assuming you have the correct education in terms of what makes a profitable deal and you find a deal that fits that criteria, you’re going to have to decide if you can tell the fear to leave you alone and let you do the deal. To succeed in real estate investing, you will have to get over some of the fears.
2. Understanding the Math
Whoa, man, is this where people get tripped up! If you’re anything like me, you grew up hearing that if you just own rental properties or flip a house, you’re good! Did you hear the same thing? Even just a few years ago when I first started investing, I was touring some foreclosure properties in Orange County, CA, and I couldn’t figure out why they didn’t seem to make sense as far as how I could profit from them, but I kept thinking that if I just owned them, I should be good. I had no idea about knowing how to calculate cash flow!
I’m coming from a rental perspective — I can’t speak for flipping — but there are certainly numbers and formulas you need to understand in order to do that successfully as well. In order to earn profit on your investment, you have to know how to work the numbers. Even thinking about it, I just cringe thinking about how few people (relatively) really know that crunching numbers is even a thing. If you do not understand the math behind profitable investment properties, you will never be a successful real estate investor! (Assuming your definition of successful means you don’t lose money.)
3. Learning Constantly
I’m sure you’ve heard this one, but it can’t be emphasized enough. There is a lot to learn to be a successful real estate investor: Everything from learning to crunch numbers, to how to find good investment properties and what to do with them once you have them, to how to analyze risk, to the actual buying process. And that is all just for the physical process of buying an investment property. The mental process of all that is everything I’m talking about in this article — these 6 habits.
Then, what about after you buy your first property? I assume you want to keep going and buy more, right? This is when you have to not only keep trying to learn more, but also make sure you are learning from your mistakes (which you will have; there’s no way around it). Real estate investing is all about the learning, especially since we never had classes in school growing up teaching us how to do it! Wouldn’t it be so much easier if we had? I think so. But we didn’t, so the learning is all up to you. Don’t for a second think you can get away with not continuing to educate yourself if you want to be successful.
4. Resisting Negative Influences
You can go ahead and bet that you will have a majority of folks you are close to trying to warn you off from real estate investing. It just comes with the territory. All I can tell you when you run into this is: take advice only from those people who you would trade shoes with. Period. If the person trying to convince you that investing is dangerous and risky isn’t leading the kind of life you want to lead yourself, take their “advice” lightly.
In my case, I always consider anything anyone tells me because, who knows, maybe it will be good. But once I consider it, I also consider the source and make a decision from there as to whether I follow their advice or not. Since so few people lead the kind of life I want to, there are few people whose advice I end up taking. I have a couple people in my pocket who really do have the kind of lifestyle I want for myself, and because of that, I will always take their advice way more seriously than anyone else’s — it’s how I got into real estate investing in the first place!
I had no idea who to trust, or what advice was legit, but I met someone (who is now my mentor today) whose life I really did want. Since he was leading that life, I figured I best ought to listen to him! Just be aware that you will have more negative influences than you will positive. If you can be aware of that and also understand good advice when it is being given to you, you’ll be miles ahead of the game and be able to go a lot further.
5. Asking Questions (and Actually Hearing the Answers)
This is a big one. Never assume you know everything. More specifically, don’t feel like you have to convince anyone that you know everything. I’ve been very successful with real estate investing for the past few years, but even now, I still listen to other people and want to learn more, or better yet, realize if I’ve potentially been doing something wrong. This goes hand-in-hand with education. Ask a lot of questions. Especially ask those who are doing it better than you are. You can never learn too much in this industry! There is always something more to be learned, so on top of seeking more education via books or however else you get it, ask lots of questions. The answers you get may change your world!
But more than just asking, be sure you are actually open-minded to the answers and don’t just rule them out immediately. This part ties into the “taking advice from those you would trade shoes with,” but assuming you are asking the right people, listen to what they have to say and before pooh-poohing it immediately, see if what they are saying isn’t exactly what you need to do. No matter what, don’t ever try to put a façade on because you think you need to look like you are perfect and have all the information. People will respect you more for openly trying to learn rather than being supposedly perfect (because we all know you’re not; none of us are).
6. Taking Action
At the end of the day, the biggest differentiator between successful real estate investors and unsuccessful ones is: successful real estate investors actually make the move. They take action. How many people do you know who just sit on the sidelines and watch everyone else diving in? Either out of fear or assumed lack of knowledge, they are scared of failure, or they are hindered by the famous “analysis paralysis.” Eventually, you just have to do it.
If you fail, well, you’ll learn a lot and be able to do the next one better. Every real estate investor is going to fail. Likely not even just once, but multiple times. So don’t fear failure; consider it a learning experience. Whatever is holding you back, you’re going to have to get over it. It’s not always easy, no doubt, but if you want to succeed, you are just going to have to do it. End of story.
Bonus: 2 More Habits it’s Helpful to Have
There are two other traits that come into play when I think of successful real estate investors, but I can’t bring myself to add them to the list of non-negotiable habits, although I highly suggest you include both of these in your plan.
1. Being Ethical
I would love to be able to include ethics in the list of non-negotiable habits, but unfortunately I have seen plenty of people who do get away with being a little skimpy when it comes to ethics and still being very successful. Well, and let me clarify, when I say ethics, I’m thinking more in terms of just generally doing what is right, being respectful of other people, and not burning bridges.
Maybe that isn’t really the definition of ethics, but you get the drift. For the sake of your own sanity and all of ours, try to be nice and don’t screw people over. It’ll just be a more pleasant world if you work that way.
2. Following What Comes Naturally
I guarantee you that you will be much more successful if you follow what comes more naturally to you. Don’t you think that I’d rather be a house-flipper than a rental property owner? Of course I would! I think it could be fun, I could end up with huge chunks of cash in my pocket, and it would be a great challenge that I would enjoy. However, flipping just isn’t in my grain. I wish it were, but it’s not. Rental properties are, though, so I stick with those. There are so many options as a real estate investor, you can definitely find something that follows your grain. Stick with that, and you will see a lot more success (and a lot less headache!).
Real estate investing can be a blast. It can also be intimidating, but it’s great to get into — especially today, when our financial situations may be less secure than they used to be. Investing is financially smart, it can be fun, it can be challenging, but do it right, and you will be in good shape.
Any other non-negotiable habits you can think of that a successful real estate investor should have that I left out?
Don’t forget to leave a comment below!
Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.