If you have listened to any of the 200+ BiggerPockets Podcast episodes, you have heard the famous question, “What sets apart successful real estate investors from those who fail, quit, or never get started?” This question is asked to every guest on the podcast, of which many if not all are in fact successful real estate investors. What I find fascinating is out of the 200+ episodes, you will hear all different kind of answers. So who is right?
The answer is all of them. Oftentimes the answer you get is what the investor currently has to do to set themselves apart from those who fail, quit, or never get started. That target is constantly moving throughout the career and evolution of a real estate investor. What I realized is in my own career is the answer to that question has changed as my investing changed.
When you hear 200 different answers to the same question, you may be left thinking, “Who should I listen to?” This article will show you how to take the advice from all of the answers and use their wisdom at the most valuable time as you progress in your career.
Let’s look at some of what people say set the successful apart:
- Hustle & Grit
- Perseverance & Persistence
- Passion & Dedication
- Self Discipline & Self-Control
- Networking & Relationships
- Goals, Targets & Metrics
- Continuous Learning & Reading
- Your “Why”/Purpose
- Systems & Procedures
- Delegating & Leadership
So often when the person is asked, “What sets apart the successful investor?” their answer is focused on what they personally are working on in their own business to ensure their own success. This happens because it is at the front of their mind. The reality is all of the answers from all of the podcast guests are not only correct, but all the successful investors do them in some capacity.
People excel in different categories more than others. The list above is set in somewhat of an order. The order represents the evolution of an investor. Number one is what sets apart the successful when you are just getting started, but numbers 1-10 are what set apart the investor with a few more years under his/her belt. The trick is knowing when each discipline is needed and how much, when to add on the next and when to stay put. If you are a skilled entrepreneur, you will have a sixth sense for climbing this ladder while juggling these disciplines.
What do all these traits really mean and how do they fit into your investing? Let’s talk about each, and I’ll share an example from my own career in each.
How to Purchase Real Estate With No (or Low) Money!
One of the biggest struggles that many new investors have is in coming up with the money to purchase their first real estate properties. Well, BiggerPockets can help with that too. The Book on Investing in Real Estate with No (and Low) Money Down can give you the tools you need to get started in real estate, even if you don’t have tons of cash lying around.
Hustle & Grit
This is the most basic starting point that is needed to get a real estate investment career off the ground and growing. Literally anyone has the capacity to utilize this very important discipline. Executing on it is hard and can be draining. When I think hustle and grit, I think of doing what other people aren’t willing or can’t do in order to set yourself apart. It’s about taking your hard knocks and getting back up. A very successful businessman once relayed some advice to me and said, “If you want to compete with the big guys, do something they can’t — something un-scalable, something only those willing to be in the trenches can do.” A great example of this would be door knocking. I guarantee you, an investor who walks neighborhoods knocking on 500 front doors a week trying to find leads will reach success faster than someone who looks on Zillow.
In the start of my career, I relied on grit. I had nothing else to give. I didn’t know much, I didn’t have much money, and I didn’t know people who had either or even that I should be looking for them. What I did have was hustle and lots of it. My partner and I worked 12 hour days, 7 days a week doing all the renovations on our rentals. We would drive around on trash night to collect scrap metal to pay for our needed materials we bought off Craigslist. There is no possible way we could sustain that or grow it beyond ourselves. But it worked. It got us going. We did what no one else would do in order to take the next step up the ladder.
Perseverance & Persistence
This is likely the most common answer to what sets the successful apart. The reason is this trait is likely one of the most frequently utilized over the entire career of a successful investor. Having perseverance is the act of never giving up. This could mean looking for deals, finding financing, or buying another rental after you just went through a terrible eviction. Oftentimes the successful have to persevere through the struggle that hustle and grit leave in their wake.
In our business, no one would lend us money back in 2011. We were in our early 20s with no W-2 income. We hustled, saved the cash, and started buying single-family homes to rent. It took us two years of repeating this process and persevering through the hardships to eventually land a cash-out refinance that started the exponential growth in our business. In real estate, things go wrong if you own one unit or 10,000 units — flip or wholesale. There is always something that will go astray. Those who are persistent and continue to solve the problems are those who continue to succeed.
Passion & Dedication
Without a passion for what you are doing, you will quit. The path to becoming a successful real estate investor is too hard and takes far too much effort for you to complete without having any passion. To persevere through the hard knocks, passion for what you are doing is going to be needed. Without it, you will likely stay down for the count.
It’s hard to describe the passion I’ve always had for real estate. I remember during those beginning years of working 12-hour days in the Ohio winters in a house with no heat. The temperature would dip into the negatives. We would be at the house working before the sun was up. You would think on those mornings when my alarm when off, I would want to do anything but put on my cold, dirty work jeans. That makes sense, but because of my passion, I often woke up without an alarm. I would wake up from a dream where I was reviewing the needed materials I needed to pick up from Home Depot on the way to the property. I would open my eyes and be excited for what in the mind of almost anyone else would have been a horrible day to come.
Self-Discipline & Self Control
When interviewed on episode 124 of the BiggerPockets Podcast, my answer to the “what sets the successful apart” question was self-discipline. The reason I had this answer is because at the time, that was the step that was in the forefront of my own business. Our company had begun to make good money, we had large chunks of equity being removed from our rentals in cash-out refinances, and we were doing really well in flipping. That year, my net worth quadrupled, and I had made more money that year than the preceding 24 years of my life combined. It would have been really easy for us to say, “It’s time to buy fancy clothes, cars, houses,” etc. But instead, we stayed disciplined. We had a passion for what we were doing, and we knew if we stayed persistent and continued to hustle by reinvesting everything back into buying more property, we would see exponential benefits. We had the self-discipline to delay gratification to a later date.
When I was 17 years old, in high school working as a handyman on my nights and weekends, I bought an old 1998 Dodge Ram work truck. Seven years later in 2015, when we had made all this money and increased our net worth, we still were driving that same old Dodge Ram. Below is a picture of me and my business partner at a job site in 2015 with our old Dodge Ram that we drove until it couldn’t drive anymore.
Those with self-discipline have higher emotional intelligence and financial control, and they ultimately are more success in life and in wealth-building.
Relationships & Networking
Mentors, partners, lenders, cash buyers, motivated sellers — the list goes on and on. We see these relationship connections asked for on the BP Forums all the time. Any business will die without good relationships. However, when the successful investors say that relationships set those who fail apart from those who succeed, they are not telling you to go ask strangers to be a mentor, partner, etc.
The relationships they are referring to are relationships where value is exchanged. Relationships thrive when they are not one-sided. A great example of this is a newer investor looking for a mentor to help them understand analysis, renovation, and management. If the mentee simply asks, “Can you teach me analysis, renovation, and management?” the potential mentor will 99.9 percent of the time say no. However, the mentee could say something like, “If I knock on 500 doors per week until I find a lead, will you help/teach me how to analyze the deal to see if it makes sense from a renovation and management perspective? If we analyze it and the deal looks good, I will give you the lead to buy it if you show me how to write a contract.” This relationship will thrive because the mentee and mentor are both adding value. This can work in any type of relationship in business.
The investors who attribute their success to relationships are constantly trying to add more value than they take in their relationships.
In my own business, one of the many relationships I am grateful for is the one we have with our primary lender. This lender was the first bank to give us a chance back when we were first starting. Over the years, I brought local investor meet ups to this bank to drum up business for them. I have moved all of our business accounts over to their bank to help them meet deposit goals. I recommend this bank constantly. And most importantly, I perform on my loans just as agreed. After many years of building our relationship, this bank has lent us multiple millions to buy more property.
Without relationships, you will suffocate your growth and eventually burn yourself out.
Goal, Targets & Metrics
Imagine a plane flying at full speed high above the clouds. The radar, navigation, and all tracking electronics are off. The co-pilot says, “Where are we going?” and the pilot responds, “I don’t know, but were getting there fast.” You don’t want to run your business like these pilots.
Sometimes, in the beginning, it is necessary. Back when all you have is hustle and grit, often you find yourself working so hard that all you can really do is fly by the seat of your pants and hope you end up somewhere better than you were yesterday. As your company develops and you start bringing in relationships, you need to steady the plane and understand where you are going. Setting goals and defined targets for those goals using key metrics in your business is something the successful continue to hone as their business succeeds and data comes available.
I’ll be honest — we were flying by the seat of our pants for a while. We stayed in the hustle and grit phase longer than most. Once we began to develop, we started implementing accounting software, KPIs, goals, and targets.
Someone once told me you can’t improve what you do not measure. The successful investor can direct their business and see where it’s headed.
Continuous Learning & Reading
Einstein said, “When you stop learning, you start dying.” This very idea is why many investors say continuous learning is what sets apart the successful investor from those who give up, fail, or never get started. This is even more true today than 20, 10, or even 5 years ago, as technology is changing things at a more rapid pace than ever. Successful investors understand that they do not know what they do not know. Because of this, they constantly are expanding their horizon.
In the beginning of an investment career, it is obvious you have to be learning. Where the mistake happens is when some investors have hustled, persevered through all the years of challenges, had the self-control needed, built strong relationships, and tracked their companies goals to the cent — but then they think they must know it all if they have done this well.
The investors who sustain success prioritize and never stop learning. Oftentimes this is the answer you will get from the investor who has great accomplishments but is looking for a way for their company to break through the ceiling in their next growth phase.
I learned most in the beginning through trial and error. Later, I began listening to the podcast and then audio books. Anytime I am driving, cutting the grass, or doing any other task that doesn’t take concentration, I typically have my headphones in expanding my horizons.
Your “why” refers to why you are doing what you are doing. Without this, you won’t make it through numbers 1-7. This is where passion is formed. Why would anyone in their right mind jump out of bed in the morning to work physically grueling 12-hour days, 7 days a week in the freezing cold while receiving no paycheck for 2 years? The answer to those types of questions is where you find the “why.” The successful investors set themselves apart from the quitters by using that reason as the fuel to succeed.
Like other things, I believe the “why” is a moving target that evolves with you as you develop. I know mine has. In the beginning, my “why” was to have enough money to pay for food, a place to live, and the ability to be safe. But then I quickly realized, “OK, I got the food, house, and safety.” So your “why” shifts. Later, my “why” was to provide a lifestyle to start a family on and build a foundation for long-term wealth. Once that was achieved, I realized what was really important to me was to be financially free.
I wouldn’t say I’m 100 percent there, but I know even if I take my foot off the gas and coast until I’m 30, I will likely make it there based on the relatively simple lifestyle I enjoy. So why would I bother to continue? We recently decided to add on a new business model and do syndications to buy large apartment complexes. Do I need to do this to reach my own financial freedom? Absolutely not. My “why” has shifted with me rising up through the human needs we all have. The reason is because my “why “ has new meaning and pushes me forward. I think financial success and spiritual fulfillment are two very different things. For me, spiritual fulfillment comes from being the best you can be while helping others do the same. I choose to continue to push on full steam and venture into syndication because I know that is where I can make the biggest positive impact on others using the skills I have.
Related: 6 Major Reasons to Invest in Real Estate (& How to Invest With Purpose!)
The investors who can look inside themselves and find this answer to why they can’t give up do everything in their power to solve their “why” and that sets them apart from those who are chasing money and inevitably fizzle out.
Systems & Procedures
The successful investors focus on creating a proven way and documenting it so it is not just another unpredictable event that will need to be addressed. We all have seen the investors who do not have systems. All they do all day is run around putting out the same types of fires over and over. They often have their phone glued to their face 70 percent of the day and never have time to grow the company.
In our company, we have a operations manual. That tells us how we do what we do. We use software to help simplify and direct operations. Successful investors differentiate themselves from the unsuccessful by putting these systems in place as their business grows.
Delegating & Leadership
After the successful investor has learned to use all the preceding traits, they often focus on leading others to learn these traits and use them for the organization he/she has built. I believe this is one of the final ceilings to break through that sets the successful apart. They learn to lead. Once they earn the respect enough to lead, delegating is simple and the company will boom. The leader learns to build a team around them that trusts and respects them. They do this with clarity and empathy.
As our company has added employees and staff, I am learning how much I enjoy this part of a business. It’s rewarding to watch people who otherwise would have been strangers join together to follow a common goal using systems and procedures that have been set in place through years of hustle and perseverance.
What sets apart the successful investor from those who fail, quit, or never get started? A lot.
The reason you hear so many answers to this questions is because there are so many correct answers. Each answer will become true to an investor at different parts of their business. I have found they build on each other like a pyramid much more so than just completing one and moving on to the next. If delegating and leadership is the top of the pyramid and you have reached that that trait but you completely give up on the lower level of perseverance and persistence, that pyramid is likely to crumble and fall. I hope you all will take these traits and use them to set yourself apart from those who fail, quit, or never get started.
What would YOU say is the most common reason investors fail, quit, or never get started? What truly sets apart successful investors from the rest?
Let me know your thoughts with a comment!