5 Crucial Questions to Ask Yourself BEFORE Becoming a Real Estate Investor
If real estate investing were easy, everyone would be doing it.
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You’ve likely heard this statement describing real estate or some other type of business or entrepreneurial effort. Concerning real estate investing as a part-time or full-time business to generate cash flow and/or large amounts of profit, it is particularly true.
Let’s face facts; many things have to be done between where you are currently in your real estate business and the future version of yourself where you’re well known by the community and creating substantial value in multiple real estate deals simultaneously. Becoming a successful real estate investor does not come without much time, energy, education and daily action.
5 Crucial Questions to Ask Yourself BEFORE Becoming a Real Estate Investor
1. Do you follow through on things?
I love this question because it is a question that only we ourselves can truly answer. Keep in mind that if you lie on this question, you are only hurting yourself. The ability to follow through is crucial. Dreaming about being able to retire early or six-figure paydays may be fun; however, the effort required is immense, challenging and available to most folks who have enough ambition to consistently follow through until the goals are achieved, or a better plan realized.
Pro Tip: The opposite of people who follow through on things are people who like to get started on a project and then quit before completion. If this is you, then aim to complete small tasks in order to give you the courage and confidence to complete larger ones.
2. Are you incentivized by rewards?
While starting out, many real estate investors do not realize a profit for at least a few weeks or months after beginning to invest. In addition many of the daily actions and skills needed as a real estate investor require effort and discomfort as we grow into more competent investors. It is important to reward yourself. By using delayed gratification, you can encourage yourself to take daily action and push yourself to become an active and productive investor while keeping your reward/prize in the front of your mind.
Pro Tip: Create a list of goals with deadlines. Next to each goal, think of an appropriate reward or prize that you will buy for yourself or give to yourself once this goal is achieved. Lastly, double or triple each goal before you achieve this reward. Aim high in your goals; you can do it. Example: If you wish to speak with 10 sellers, your new goal is 30 in order to achieve the set reward.
3. Do you know your opportunity cost?
As previously mentioned, becoming a competent and profitable real estate investor takes a good deal of time and daily effort. If you choose to take on the responsibility and burden of becoming a successful real estate investor, then you are eliminating free time to dedicate to other areas of your life or another side business, hobby or social group. Be prepared for early mornings and long nights, as well as stepping outside of your comfort zone on a daily basis.
Over the years I have seen many well-meaning folks underestimate the effort needed in their real estate investing businesses, only to receive little to no results. These folks are not lazy; however, they are not committed or focused in real estate currently. If you know that you do not have one hour or more of free time multiple days per week, then perhaps your time would be best spent with a more realistic and appropriate side business or hobby.
4. Do you have a social support system?
Be your own best cheerleader! Confidence is broken and businesses are sabotaged with negative thinking and negative emotions. Be certain to surround yourself with similarly thinking, highly motivated and positive real estate investors. Aim to read more self-help and business-related books.
More important than books to many of us are our own family members and friends. Oftentimes we know very well who is negative, un-motivating and weighing us down emotionally. Negative friends and family members can be an anchor keeping you from moving forward as quickly as you otherwise could without this influence in your life. Make certain to protect and prune your mental thoughts.
Here is a quick key to categorize your thoughts.
- Thoughts and ideas which propel your real estate investing business and make you feel proud are good. Keep these.
- Thoughts preventing, hurting, belittling or slowing down your real estate investing ability are bad. Ditch these thoughts and/or friends.
Pro Tip: Make sure to network with other real estate investors here on BiggerPockets. Join the Forums here to chat and ask questions daily. Join a handful of local real estate investment clubs by going to meet up sites to find a group of like-minded real estate investors near you.
5. What niche/focus makes you most happy?
It is important to be happy in life, and your real estate investing business is part of your life. Make sure you choose a niche that suits you best. Many of us already understand the importance of choosing a specialty while real estate investing. It is a rash and foolish real estate investor who aims to be an expert in every real estate specialty.
Here are some criteria to review while choosing your ideal niche:
- Which local markets are highly competitive?
- Which local niches in real estate are highly competitive?
- Where locally are sellers in need of the most help?
- How much available capital do you have to invest in a future real estate transaction?
- How is your current credit worthiness?
- After talking with multiple sellers, what help is required from an investor? (Investors create value so aim to help sellers.)
Pro Tip: Create a list of your top five ideal real estate niches. Over the next two weeks, aim to take out local investors in each niche to eat and discuss this type of investing. Become more educated than you currently are on the exact niches, then proceed to choose the top one or two niches you believe will accomplish your goals and make you happiest on a daily basis.
Bonus #6: Do you like people?
This one may cause some debate. Indeed, with the help of the internet and real estate agents, you are able to purchase a piece of property without ever talking to a seller. Likewise, you are able to outsource repairs and resell a home without ever seeing it or meeting the new buyers. Even still, there are real estate investment companies that specialize in providing turnkey real estate investments to almost any buyer with cash or bank financing.
However, for most real estate investors there is genuine joy and personal fulfillment in solving people’s problems by helping buyers and sellers locally. With nearly every real estate investor I meet, there is a good degree of social interaction happening between buyers, sellers and investors on a daily basis.
It can be very helpful for a real estate investor’s bottom line to be positive, helpful and disarming in his or her real estate business. If you do not enjoy working with people or socializing with people, then fear not. Simply adjust your tactics and realize there are (limited) ways to invest without working directly with the general public.
In conclusion, real estate investing is possible for nearly every reader not reading this from prison or their death beds. I say this past sentence to drive home the concept that real estate investing is possible for almost anyone with perseverance, dedication and daily discipline. This article is aimed to inspire you and push you beyond the limits of your personal best. Within a short radius around your home, there are likely buyers and sellers that are confused and really need your help. These sellers and buyers may not know who you are currently; however, this is a very solvable hurdle.
Investors: What questions would you add to my list?
Be sure to let me know with a comment!