There is no single definition of a successful real estate investor. Success looks different to everyone, depending on their investment goals, their market, and their own unique journey.
While success is objective and the path to the rewards that come with that success contains a number of variables, there are several traits that all effective real estate investors seem to have. If you’ve been thinking about buying real estate or you wonder whether you have what it takes to do this right, consider whether any of these descriptions sound like you.
As professional property managers in Idaho Falls and Pocatello, we work with investors all the time. We help them grow their portfolios, analyze where they are, and plan where they want to go. We do more than lease, manage, and maintain properties; we provide advice and strategies that will help them succeed as investors. These are the traits that our best clients tend to have.
Successful Investors Have a Sense of Purpose
Call it passion. Call it a “why.” The investors who succeed the most are clear about their investment goals. They know exactly what they want to achieve, and why it’s important to accomplish those things. If you start buying and selling and renovating and renting out properties without a clear set of goals, you’ll find yourself flailing. You won’t know which opportunities to pursue and which to let go. You’ll have a hard time understanding how to make decisions about rental values, renovations, and maintenance schedules.
Investment goals come with a lot of benefits. They keep you focused. They help you avoid bad acquisitions. And, they drive the decisions you make for every property you buy and for your entire portfolio.
Having goals is important, and understanding the importance of remaining flexible is also a key to investment success. Your written investment goals should represent a living document. You’ll want to review them every year or so. They are likely to change and shift as sure as the market will change and shift. Set up a strategic plan for the next year, the next five years, and the next 10 years. It’s never too early to think about your eventual exit strategy.
We do not meet a lot of successful real estate investors who have not established clear and focused investment goals. Your sense of purpose is where your real estate journey should begin.
Required: Strong Work Ethic and Love of Learning
You cannot invest successfully in real estate without knowing anything about it. You don’t have to be an expert in the market and the industry, but you do have to be willing to educate yourself and do some research. Even when you surround yourself with a network of professionals, you need to know how the process works and what’s likely to yield the best results.
Investors on a path towards success are willing to read books and subscribe to newsletters and attend conferences. They take courses to gain new knowledge and stay current in the field. A lot of the investors we work with have their own real estate license or they get involved in general contracting or lending. Smart investors will network with people who have knowledge that will help them with their investment goals.
If you’re someone who is willing to wake up early, stay up to date on the latest investment and real estate news, talk about real estate, and consistently look for new opportunities and ways for making your existing investments perform better, you’re likely to succeed. This has to be more than a passing interest; becoming an investor is a long term investment in yourself and your properties.
Calling real estate a “passive” investment is misleading. You may not be the one working with tenants and fixing up properties, but you need to be aware of how the market is shifting, what your residents are demanding, and how competing properties will impact your own. You have to be present and active.
Successful real estate investors love learning, and they’re able to stay interested in their own investments and the industry and market as a whole.
Willingness to Take Chances and Exercise Restraint
Successful investors have to be curious. They have to be willing to take chances and make leaps that others might find too risky. To invest in real estate, you have to be bold and you have to embrace your imagination. Smart investors see potential where others immediately see loss. They’ll be willing to diversify. To think outside the box. To try new things.
An investor earning money also knows when to step back. Restraint is often required, and a serious sense of self-awareness.
A successful real estate investor has the self-discipline to walk away from a deal that isn’t going the right way. They’ll avoid an entire market if it doesn’t match their investment goals and they’ll reject a super-cheap property because of the renovation and the time that would be required to get it on the rental market.
Look at the recessions and the economic struggles of the past. Most investors who lost all their money or had to walk away from properties during industry and economic downturns failed because they lacked discipline. They bought too quickly or leveraged too much or got greedy or followed the crowd.
Successful Investors Need Patience
One trait that’s difficult to possess but absolutely necessary in real estate investors is patience. Can you be patient during a slow market? Can you be patient when the properties you own aren’t cash flowing yet?
Are you willing to wait months or even years to find the deal that’s right for you?
Real estate is not a way to get rich quick. It’s not for people who tend to get frustrated and give up as soon as things get difficult. If you tend to buy a property just because it’s available, you might have a hard time reaching that level of success that you’re hoping for. Instead of following every hot trend and buying every unit that looks good, smart investors will know when to move and they’ll know when to wait. Successful property owners don’t rush in when the investment isn’t worth it.
The longer you hold onto your real estate investments, the more money you’ll make from them. If you sell a property after two years because you’re not making enough money every month, you’re missing the point of a long term investment property.
Long term thinking and planning is essential. If you want to be successful, you’re committed to your real estate investments for several years.
Understanding and Respecting Money
You don’t have to already be rich in order to invest in real estate. But you do need to understand money. You need to know how to use it; when to spend it and when to leverage someone else’s money. You need to know how your credit looks, where your cash is distributed, and how you can effectively analyze your income and your expenditures against your short term and long term investment goals.
Most successful property investors are good at managing money. They have understood the importance of saving money for acquisitions, renovations, preventative maintenance, advertising – the list goes on. There’s always something that requires resources when you’re investing in residential or commercial real estate.
If you’re quick to spend, you may have some trouble being as successful as you could be. As you begin generating money with your investment properties, prepare to keep that money available. Resist spending it all right away. Wealth does not arrive all at once; it’s built. That process takes time and strategy. It requires you to continue funding your own investments.
Be protective of your money, whether you’re negotiating your next deal or deciding how to pay for the property you want to buy.
Ability to Ask for Help
Asking for help does not indicate weakness. In fact, it’s the exact opposite. When you ask for help, you’re demonstrating strength. You know the value of surrounding yourself with smart people who can help you reach your goals.
Successful investors do not go it alone. They do not feel like it’s reasonable to do everything themselves.
Smart investors know that they need relationships with:
- Real estate agents and brokers
- Lending professionals
- General contractors and vendors
- CPAs and tax specialists
- Attorneys and insurance agents
- Property managers
By establishing these relationships and nurturing them throughout their investment career, successful real estate investors are able to leverage the experience, resources, and talents of people who are also interested in earning money from property. They recognize the importance and value of surrounding themselves with experts.
What are your real estate investment goals? What are you hoping to accomplish now and in the future? When you start there, and you network with people who have already done what you’re trying to do, you have a much higher chance at being successful.
We can be one of your investment partners when it comes to exploring the opportunities available in Idaho Falls and Pocatello. Contact us at Jacob Grant Property Management, and we’ll tell you more about how to make a difference in real estate.