I was asked this week by an investor what my week looks like.
He wanted to know what did I do each day as a way to maybe emulate and learn. That was a pretty humbling question for me.
Truth is, much of my week is the same as most other real estate investors with the exception that I also help run a $50 million company whose stated mission is to help as many real estate investors as possible. I figured an article on the habits that help make successful real estate investors would be a great way to answer that question.
These are things that I not only try to do each week (if not daily), they are also the same things that really good investors in other parts of the country and in other real estate disciplines do as well. Believe me, it is not rocket science. If you will build time into your week to do these six very basic habits, you will look up 52 weeks from now and find yourself in a very different place.
How I Bought, Rehabbed, Rented, Refinanced, and Repeated for 14 Rental Properties
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1. Education, Education, Education
I am a big fan of reading and educating myself. If you have spent anytime reading my articles on BiggerPockets.com or blogs at my website, you know that sharing book lists and suggested reading could be considered a part-time hobby of mine. I firmly believe that I need to be educating myself constantly.
The rules of the real estate game are changing constantly and there are people who share their information and data constantly. Many of those people are smarter than me and I have no problem admitting that. However, that does not mean that I cannot be a sponge and soak up as much of their knowledge as possible. I think that reading, listening to webinars or presentations and attending presentations, seminars and meetings is an incredibly valuable tool to staying on top of both the good and bad that is in the real estate industry.
I try to spend an hour a day at a minimum reading real estate articles on-line or reading real estate and leadership books. I also set time aside each week to listen to webinars that are being offered on all sorts of topics from 1031 exchanges, self-directed IRAs and even other vendors ideas on buy & hold real estate. Lastly, I will spend from 2-4 hours each week reading periodicals on finance and economic issues and even business leadership topics. I learned these habits from my dad and my older brother and while I may not be as disciplined as they are, the lesson itself of constantly educating myself has definitely taken hold.
I may not be the smartest guy in the room, but I can carry the conversation thanks to proactively staying in the know.
2. Meeting With Other Real Estate Investors
I had a great lunch last week with an investor here in Memphis. He had reached out to me and wanted to know if we could go to lunch. Right off the bat I was impressed because he took a simple step that 99% of all real estate investors will be too self-conscious to take. He reached out an asked to meet.
He really did not have to invite me to lunch to ask his questions, but I think he understood that there is something inherently valuable to sitting across the table from someone and just talking. There is a great book that I think every real estate investor should read titled “Never Eat Alone” by Keith Ferrazzi. Taken literally…it means you should be spending your time with someone who is going to help make you better! Period.
I try to meet with other investors either in person or on a call – even a Skype call – as often as possible and usually for nothing more than gossip style conversation on what is working in your market. I have learned so much from simply listening to other investors tell me the ins and outs of their businesses. I have also learned that I really enjoy helping and sharing with other investors so the social aspect of hanging out and talking really appeals to me. This is an invaluable habit that has really helped to propel me forward from my very first days as an investor when I invited my first mentor to have coffee.
3. Talk To The Team
I recently wrote an article about the Myth of Passive Investing. This habit fits right into my thinking. If you have surrounded yourself with a high quality team, they still need to hear from you on a consistent basis and you need to hear from them. It is called accountability and it works both ways. Your team will hold you accountable to the goals and vision that you have given to them. You should hold them accountable for their piece of that vision and make sure they are progressing you toward your goals.
The myth of passive investing is that belief that buying from a turnkey real estate company means that you sit back and the checks arrive and you don’t have to do a thing! That could not be further from the truth and investors have to realize this. If you hire a property manager or hire a renovation crew or have an inspector whose job is to inspect your portfolio twice a year or even if you hire a money manager who is supposed to keep your books straight and report to you monthly, you have to speak to your team constantly.
In the case of the turnkey company, you have to look at the monthly statements to review capital expenditures and occupancy issues. You have to make sure that what you believe is happening, is actually happening. Just because you invest in a passive real estate investment where the day-to-day management is handled for you that does not mean that you passively sit back and never talk to your team. The best real estate investors are the ones who stay up to date and informed on a regular basis. They know that their TEAM knows who is in charge and that the investor is always inspecting what they expect from their investments and their team.
4. Monitor Your Financials – Keep Good Records
This goes hand in hand with habit number three. The best investors I know do not leave their finances up to someone else. They update their rent rolls monthly and keep their financial records in order. Even those that use accountants and CPA to do the heavy lifting each month are getting reports and updates on a regular basis.
A big part of my background has been learning from really good people AND learning from my own mistakes. A common theme among all really good real estate investors is a need to know the financial situation of their investments. They are aware of accelerated pay-offs, refinance opportunities, higher than normal CapEx charges and the effect those will have on their month, so on and so on. They are in the middle of their financial situation. Many of them have a folder on their computers or on a separate hard drive that has their last two years tax returns, personal financial statement, rent rolls and financial team with contact information. The purpose of that folder is to be kept up to date every month so that when and if they need to share that with a possible lender, partner or other entity, they can have it sent in a matter of minutes. I can promise you, nothing is more impressive to a potential lender than requesting financial data and having it delivered before you can get off the phone!
5. Monitor Your Opportunities
This may sound silly – almost as if it doesn’t fit with the rest of the list. However, If you follow the lead of other investors that you respect, you will hear a common theme among them. Most investors that I know are never in the market for property and yet, they are always in the market for opportunities. You hear stories of single–family investors who suddenly buy commercial property or a multi-family. You hear stories of multi-family investors who suddenly 1031 exchange into a triple net lease property anchored by a chain store.
More common still is the story of the single-family investor who has a nice small portfolio that is performing nicely and hitting their long-term goals and suddenly they are under contract to double the size of their portfolio. All of the scenarios occur because smart, savvy investors constantly keep their eyes and ears open to new opportunities. I am approached on a regular basis from local banks with great opportunities even though I have never mentioned that I am in the market to buy more. Sometimes I take action because the deal is a great opportunity either for me or for my company.
The point of this habit is that whether you are in the market to buy more properties or not, you have to be consistently listening to the wire and letting others know that you are a serious player when real opportunities come along. When you take yourself out of the game completely, your days of scoring good deals are over.
6. Honest Evaluation
Honest evaluation may be the hardest habit of all. If you have heard me speak over the last couple of years, chances are you’ve heard my brutal honesty when it comes to my own personal mistakes as a real estate investor. It is not self-deprecation, but rather honest evaluation of my mistakes and the steps I have to take to avoid those same mistakes in the future. I do the same thing when talking to other investors. I do not hold back on honest opinion and advice and I do not hold back on sharing my own experiences. Honest evaluation means you are able to look in the mirror and own your decisions.
I have a great deal of admiration for the way many investors are able to honestly evaluate their deals. It is easy to spot a phony when they begin to tell you how great all of their investments are and they want to brag about their latest deal. When an investor can tell me about the “usual” deal and then tell me that they somehow lucked into a really good opportunity, I know they are the real deal. Humble, respectful, thankful for the opportunities they have. These are the words that I use to describe the best real estate investors that I have met. All of them are able to honestly go through their history and not only learn from their mistakes, but they also share those mistakes with others and acknowledge that a little luck in this business has never hurt any of us!
In no way have I mastered these six habits, but I work on them weekly. I think there is always a fine line in how you conduct yourself and show appreciation for your own struggles while still acknowledging that you have a long way to go. I think simply recognizing that as a real estate investor you can always learn and grow is the way we keep ourselves on the side of the line where positive, productive and successful investors reside.
What do you think about the 6 Weekly Habits?