There are several distinct stages of being a real estate investor. It is important to recognize each, their pros and cons, and what is coming next.
A real eye-opener for me just recently was hearing these very simple principles and phases again. Often we know things, but it takes hearing something said or presented differently for them to be reinforced in our minds and for us to remember them. This can apply to many things in life, from staying motivated to running a business and investing for our futures.
There are several stages of being a real estate investor. Each has its pluses and minuses. Each has its own risks and opportunities. Recognizing them is vital to staying on course to your goals, dodging the pitfalls, and maintaining your gains.
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Stage #1: The Awkward Beginner
Every new real estate investor starts off in this stage. You may not feel incredibly confident when starting out, and you may make those awkward mistakes. You might fumble your words when talking to buyers and sellers.
At this stage, you are unsure what you’re doing and need a lot of guidance and instruction on what to do. Just like when you first drove a car, you think about every little thing—checking the mirrors, fastening the seat belt, adjusting the seat, etc.
You might be unsure what to buy or invest in, or you may frequently second guess yourself. However, at the same time, you have the opportunity and time freedom to constantly think about what you are doing with your investment model. It’s a great time for tweaking and honing your strategy. You can choose whether to fix and flip, buy and hold, or wholesale property.
Enjoy this time. Everything is new and exciting. You’ll make occasional mistakes, and some things could be smoother. Hopefully they will be minor, and it will get easier.
Stage #2: The Betterment Seeker
At this stage you have a better grip on what you are supposed to be doing and how to do it, though you still need to think about the actual mechanics or seek much needed guidance.
You’ve done a couple of transactions and are getting a little more systematic in your real estate investing. You know more of what to look for, what the steps in the process are, and what you can do to make it more profitable. You are likely more organized.
However, there is still lots of room for improvement and smoothing things out at this stage. You may still make tweaks to your real estate investment strategy, the types of properties you are investing in, and how you structure deals. Don’t let small blunders or underperforming your goals deter you. Stick with it. Keep an open mind and stay flexible, while constantly honing your craft and learning from others who are more experienced or even partnering with them.
Stage #3: The Natural
The third progression of being a real estate investor is becoming a natural. This might take a some years, but if you are not here yet, know that you will make it with enough experience. They say it takes 10,000 hours to gain enough playing experience to become a expert violist. That 10,000 rule can apply to many things, from cooking to networking and investing in real estate. That’s when you’ve really hit a natural level. You get in a good flow, and things become instinctive. You are instantly able to size up properties and their potential, you can negotiate deals on the fly, and you know what to look for and how to spot issues. You feel in your zone at this stage and can do a lot more volume with ease. Stick through to this stage, and you’ll be glad you did.
The one danger to this last stage is that you can become overconfident. You think you’ve “made it.” Ego tells you that you did it all yourself and you are a genius who doesn’t need to rely on anyone else, because you know better. Many end up slacking on the very things that got them to this level of success. Then everything falls apart fast. Remember what got you here—the good habits and tedious day-to-day steps. If it was being meticulous with the numbers, constantly learning, and going above and beyond to help others and working hard, make sure you are still doing those things—at least, if you want to stay on top.
Where are you in the investing process? Any questions?