Real Estate Investing Basics

Emotional Intelligence: The Secret Sauce to Successful Real Estate Investing

Expertise: Landlording & Rental Properties, Real Estate Investing Basics, Personal Finance, Real Estate News & Commentary, Business Management, Real Estate Deal Analysis & Advice, Real Estate Marketing, Mortgages & Creative Financing
103 Articles Written

Most people assume that successful real estate investors are extremely smart people with high IQs. And while this is often true, IQ isn't the only thing that matters. You also need what psychologists call a high EQ, or emotional intelligence.

Want more articles like this?

Create an account today to get BiggerPocket's best blog articles delivered to your inbox

Sign up for free

What is Emotional Intelligence?

“[Emotional intelligence] is a measure of a person’s ability to recognize, assess, control and even manipulate emotions within themselves and others,” investment strategy reporter Wayne Duggan writes. “The skills involved in [emotional intelligence]are not typically the kinds of things that show up in a textbook or on a standardized test. They are the type of skills needed for introspection, self-awareness and empathy.”

While it’s pretty obvious that emotional intelligence is important in personal life, there’s also an immense need for it in the professional world (especially when you consider that people are almost always involved.

“Emotional intelligence can have a profound effect on one’s ability to handle situations and relationships, both personally and professionally,” explains Droste Group, a leadership development and consulting firm. “Although each person’s level of emotional intelligence is—to a degree—genetically determined, and developed in early years, with effort and guidance there are behavioral techniques one can practice to improve.”

Related: Why Building Rapport is the First Step Towards Closing (Almost) Any Real Estate Deal

Increasing emotional intelligence is all about being aware of your emotions, reflecting on them, and having the discipline to control them in very specific moments. People who do this tend to be successful in life.


3 Reasons Emotional Intelligence Matters in Real State

While emotional intelligence is significant in many careers, it’s especially important in real estate investing. Here’s why:

1. Lack of Control

While you probably shouldn’t dwell on it for too long, think about all of the things that can go wrong in real estate investing. You put in a contract for a property and the other party backs out at the last minute. You finally close on the property and plan on using it in a certain manner, but the zoning board rules that you can’t. You try to sell the property, but the market takes a dive as soon as you list it. The list of potential issues could go on and on.

As much as you may think you’re in control, the truth is that real estate investing involves a myriad of independent variables that you can’t directly influence. For someone with poor emotional stability, this can be extremely frustrating and will ultimately force them off track. Strong emotional intelligence, on the other hand, helps you stay poised in the midst of uncertainty.

2. Social Awareness

Successful real estate investing is all about relationship building. Your job is essentially about making deals. You can’t make these deals if you don’t create healthy relationships.

One of the great benefits of having high emotional intelligence is that you tend to be both self-aware and socially aware. You’re self-aware in the sense that you know your strengths and weaknesses and what you bring to the table. You’re socially aware in the sense that you can put yourself in another person’s shoes and reason with them from their perspective.

Related: The Psychology of Unity: Why Real Estate Truly is a “Relationships” Business

3. Immunity to Pressures

As a real estate investor, one of the fastest ways to get yourself in trouble is to let emotions pressure you into making a deal. While there’s often a slight gut feeling involved in a deal, too much emotion will lead you astray.

When you possess high emotional intelligence, you understand how to keep your emotions in check and use objective decision making that’s rooted in tangible facts and data.

Adding It All Up

Success in real estate investing requires more than an intimate understanding of the market and how to put deals together. You also need to possess the EQ to go alongside the IQ. While some of your emotional intelligence is decided by genetics, there's also a lot of room for improvement. Focus on enhancing it, and you'll enjoy a positive return on investment.

What do you think about the role of EQ in real estate investing?

Weigh in with a comment!

Larry is an independent, full-time writer and consultant. His writing covers a broad range of topics including business, investment and technology. His contributions include
Read more
    Christopher Smith Investor from brentwood, california
    Replied over 2 years ago
    For similar thoughts a person should read one of the many Warren Buffett books. He has pretty much always said that for reasonably intelligent people their greatest enemy when it comes to investing will very likely be themselves (i.e., their inability to control and master their own emotions, and understanding and capitalizing on that very same struggle that is constantly going on within others).