So, you want to be a better real estate investor.
Where do you start?
Maybe you read some real estate books; maybe you take a seminar; maybe you study your local market like you’re preparing for the LSAT. In the end, though, you’re not going to get there without some firsthand help — from a friend, a relative, a mentor… or someone else willing to share their experiences, mistakes and lessons learned.
If you’re a regular on the BiggerPockets Forums (or even if you’re not and you just take a quick glance), it’s hard not to be struck by both the wealth of knowledge and the thirst for more information. So many investors on BiggerPockets have achieved incredible success — whether that’s making a million by age 25 or closing on that first wholesaling deal — and the forums are always abuzz with those asking, how did you find the property, what were the numbers… or more generally, how did you get there?
Here is a compilation of 25 of the best tips for real estate investing success from BiggerPockets members who were generous enough to share how exactly they reached their goals — and the most important things they learned along the way.
Remember to leave a comment letting us know which tips you found most helpful and which specific real estate subjects you’d like our members to weigh in on in future articles.
How I Bought, Rehabbed, Rented, Refinanced, and Repeated for 14 Rental Properties
This is the dream right? Going from zero to 10+ rental properties, providing stable cash flow and long-term wealth for you and your family, and building a scalable business model to boot! Learn how this investor did just that, in this exclusive story featured on BiggerPockets!
25 Smart Tips for Real Estate Investing Success
1. Knowledge, Time, or Money: Pick One
“There are three way you can contribute to a deal: Knowledge, Time and Money. The awesome truth is that there are very few people on earth that have all three. Pick the one that you feel the most comfortable with, and go find partners that can fulfill the other two. For new investors, time is your greatest asset. With time invested, knowledge will come. Knowledge will produce money. It’s as simple as that.”
2.”Smart Guys (Gals) Have Backup.”
“I quoted this from the movie Iron Man. Don’t be the person with a failed hard drive with no back up. Every investment comes with risk. In real estate, there are lots of moving parts. Some of it you can control, some you don’t. Every time you go into a deal, make sure to have Plan B — or even C — to manage the risk in case the house doesn’t sell, or if it doesn’t rent well. In the corporate world, they have a fancy term for it. It’s called ‘risk mitigation.'”
3. Know that There Are No Tips and Tricks That Can Save You
“That’s right! Success comes from hard work, dedication and commitment. Tips and tricks are meant to help. However, if you do not spend time studying the foundation of financial education and are not willing to put in the work to gain experience, you will have serious issues becoming a successful investor.”
—Huy Nguyen, Real Estate Investor
4. Educate Yourself Endlessly
“An investment in knowledge always pays the best interest.” — Benjamin Franklin
“A good start is BP’s Ultimate Beginner’s Guide to Real Estate Investing. Participate in BP forums and learn from others’ mistakes — you’ll make enough of your own. Learn how to research your local public records for lis pendens, probate, property appraiser data, etc. You can buy lists from pay sources, but you can also create your own for free online or at the court house.”
5. Take Action
“The most difficult thing is the decision to act, the rest is merely tenacity.” — Amelia Earhart
“Don’t wait to take action; do something everyday to learn, network or pursue a deal. Write an offer on an MLS listing. Just do something — because you will learn something new from every action.”
6. Be Willing to Do What Others Will Not
“The person who says it cannot be done should not interrupt the person who is doing it.” — Chinese Proverb
“You have no money or expertise? Drive for dollars, knock on doors, put door hangers on houses.”
—Bill Byers, Real Estate Investor
7. Get Hungry
“My 13 year old boy eats daily as if he is eating his last meal. He is constantly hungry — where is all that food going? Anyway, as a new real estate investor, I am starving, but it isn’t for food; it’s for real estate knowledge. During the time leading up to my first purchase, I couldn’t satiate my appetite for information. Twenty-four/seven I thought real estate. It didn’t matter if the topics seemed redundant… I wanted to know as much as I could from as many resources as I could. To this day almost every morning I listen to some kind of real estate / business podcast or audio on my commute. I’ve even bought a few high value, low dollar courses offered by some of our BP peers. This information has been pivotal in my growth as a new investor.”
8. Remember: You Can’t Manage What You Don’t Measure
“We need to manage our investments. Ben Leybovich says this “is a full contact sport.” What that means to me is I need to record all activity that has an effect on my properties. Some of these activities will simply go into the management bucket; however, there are many small expenses that are easy to skip over, such as priming an oil furnace that has been run dry or troubleshooting a 60,000 gallon monthly water usage bill by ultimately finding and fixing a leaky toilet. The list goes on and on. If we don’t track these things, we won’t be able to accurately gauge the performance of our assets.”
9. Believe that Failure is Not an Option
“I find when talking to other newbie investors that many times they are frustrated and not sure real estate investing is worthwhile. They typically haven’t done a deal and are still at the information consumption stage. For some this stage takes entirely too long, but that is another topic. It is important to take action in some way. Set small, measurable goals that will keep your confidence moving in the right direction. If you have started by purchasing a property, there will surely be issues that will need to be dealt with. This can be very frustrating, but is simply part of the business. It is your positive reaction to these adversities that will slowly build your confidence in what you are doing. You can do this! This is also where networking comes in — reach out to your peers and share your story; this can be very therapeutic when another investor has a similar story and has come out on the other side. This is another area BP comes in. If you can’t find someone who has faced a similar issue, let me show you how to use the search function.
The takeaway here is never give up. There will be adversity. The question is, how will you react to the adversity? How do you eat an elephant? The only answer can be one bite at a time.”
—Jonathan Lafferty, Real Estate Investor
10. Have a Mentor
“I started in the business by identifying an investor with a proven track record and integrity; I became friends with him. I proposed to him that I fund his next deal and that he let me observe everything in his process. I was able to learn vicariously through his work. Best of all, this has turned into a life-long friendship and a profitable business partnership. As I enter into more sophisticated types of real estate, I continue to find more mentors and building these relationships.”
11. Know Your Numbers
“It is very important to understand how financing works. Whether you work with hard money, conventional banks or other hybrid financial sources, the ability to present the deal in a clear and concise manner goes a long way to getting a deal done. Because I understood how banks evaluate deals, their various thresholds and concerns, I was able to present a compelling case for the purchase of a 4-unit apartment building in N. VA. I closed the deal a few weeks ago without putting in a penny of my own money.”
12. Put Yourself in the Marketplace (or Better Yet, Build Yourself a Marketplace)
“I used to search high and low for deals without much success. A year ago, on a whim, I started a seminar/boot camp-free real estate investor’s meeting with a couple of BPers. The group has grown to be very active. We invite subject matter experts to teach at our meetings, and the result is a learning and sharing environment where investors of all experience levels continue to learn and get better at what they do. A side benefit is that deals get passed around in the group. I probably evaluate 4 or 5 deals from members of this group every month. I no longer look for deals; I just build relationships with other investors.”
13. Be Honest in All of Your Dealings
“It take a lifetime to build a good reputation, but it takes about 30 seconds to ruin it. There are always times that you feel like being greedy, but it is important to not take advantage of people. We can all hide behind the protection of our LLCs, but ultimately, you are a person, and the party you are dealing with is also a person. Be kind — there is enough money to go around.”
—Roger Lin, Developer
17. Create Good, Productive Habits
“Creating productive habits are the groundwork for success. Every person has the same amount of time in each day. The habits you create in your day to day will affect the success of your real estate business. I work 40+ hours a week in a call center and work on my real estate business before and after my shift everyday and on the weekends. Some example of good habits are: consistently following up with old leads, keeping in touch with fellow network investors/contractors/lenders/agents you meet to stay relevant, and continuing to learn from reading books, blogs, and websites to create an advantage for you to succeed.”
18. Take Advantage of Technology
“Technology has made my real estate journey easy to adapt. We send out direct mail to gain exclusive leads that we can wholesale, flip, or hold as rental properties. When a potential lead calls us, I use my smartphone to look up the person’s name in my lead tracker Excel spreadsheet, which allows me to find the address of their property. At that point, while I am asking them basic questions, I can pull up their property on Zillow, Homesnap, or other websites to become familiar with the details of the property. It helps with building rapport. People feel comfortable when you already know information about their property.”
19. Make a Lasting First Impression
“I have worked for years at a call center selling a intangible product. The experience and training gained has helped tremendously with handling the potential leads that respond from our direct mail campaign. A tip I have when handling the direct mail campaign leads is to always focus on making a friend. The beginning of the call is very important for building rapport and leaving a good impression. A potential customer will not decide to do business in the first five minutes of the call, but they will make a decision to not do business if they do not like you. Be honest, direct and use voice inflection. Voice inflection is very powerful. If you sound excited and happy, making a friend will be much easier. Once you find out why the potential seller wants to sell the property, you can genuinely help them solve their problem and create a win-win situation for everyone.”
—Ryan Billingsley, Real Estate Investor
20. Don’t Try to Reinvent the Wheel
“Instead, seek guidance from those in your area who are doing what you are trying to do. Even though we have succeeded in closing deals in less than six months, I feel that if we would’ve just gone according to the training and guidance we received without deviating from it, our success would’ve come earlier with the possibility of more deals. Our very first REIA meeting is where we connected with our first and second buyers, and I’m sure we will be doing more deals this way. If we would have plugged in to our REIA meetings in the beginning, our buyer’s list and power team members would have come sooner than later.”
21. Pay Attention: Some of the Best Deals May Be Right Under Your Nose
“Start within your inner circle and work your way out. You want to tell everyone you know that you are investing in real estate, starting with those closest to you: family, friends, coworkers, etc. Our first deal came from me posting on Facebook that we needed to buy a house. One of my coworkers that worked right down the hall from me actually had an extra property that he was tired of renting, and he just wanted to get rid of it. We also have a few friends asking us to help get rid of problem properties that we had no idea they had. You never know who you may know that needs to sell.”
22. Keep Open Communication
“You want to get your contract signed within 24 hours to prevent your seller from having second thoughts, getting another offer from someone else, or listening to someone telling them it’s not a good ideal to sell. Don’t allow your seller to sit through your inspection period wondering what’s going on. Let them know as soon as anything changes. With both of our deals, our sellers appreciate us keeping them up to speed as far as what is going on. This also further builds trust with you and your seller.”
—Anthony Bostic and Andre Elston, Real Estate Investing Partners
23. Ask the Tough Questions
“You won’t get anywhere if you’re afraid to ask people tough questions. That goes from investing to landlording to building a successful business. The information you need to be successful is often the most uncomfortable to ask for and often comes with answers you least like. Take heed the advice from those more experienced than you, and don’t be so headstrong as to brush off their opinions — even if you disagree.”
24. Accept the Not-So-Glamorous Parts of the Job
“The hardest things you’ll have to do are evict and terminate employment. It never gets easier, no matter how many times you do it nor how deserving the recipient is.”
25. Don’t Be Blinded by the Thrill of the Deal
“Let your most costly learning lessons come from someone else’s pocket. Never jump into an investment without a detailed understanding of all the costs associated with the project. Oftentimes new investors are in a trance and more focused on doing a deal for the wrong reason (location, architecture, amenities, personal use, etc.), and they are blinded to the real costs associated with a project, the real income potential, and whether the deal is truly a deal.”
And One Bonus…
Surround Yourself With the Best People in the Field
“When I went to my first auction to learn about the process, I stood next to the most aggressive and prominent investor. I asked him as many questions as I could between bidding. When it was done, he turned to me and said, “What is this? A Seminar?!” I smiled and thanked him. Now, years later, we call each other regularly to exchange deals, work together on projects, and ask each other for advice!”
—Mark Updegraff, Real Estate Investor
Now it’s your turn: What are your best tips for success? Which of the above have you found to ring true the most?
Don’t forget to leave a comment below! And if you feel you have knowledge to add to future articles, feel free to reach out to me.