The Keys to Real Estate Investing Success
When most people decide that they want to start a real estate investing, they typically think that they need two things:
1. A house to fix up
2. Money to buy and fix up the house
If that was all anyone needed to create real estate investing success, then there would probably be a lot more successful real estate investors out there! Here are three keys to real estate investing success that any real estate investor should consider before purchasing their next investment property.
1. Have a Vision for your real estate investing business
A Vision is a written statement of what you want your real estate investing business to look like at a point in the future. For example, “Over the next 3 years my real estate investing business will produce $80,000 which is enough to pay for my daughter’s college tuition.” Know what you want to accomplish before you ever start real estate investing.
2. Develop a Plan
Once you know where you are going, you have to develop a plan to get there. Using the example from above, a specific strategy might look like this: “To make $80,000 investing in real estate in 3 years I am going to buy, fix and sell investment properties and am going to save all of the profits from the houses I sell. The first year I am going to earn $20,000 total from 2 houses, the second year I will earn $30,000 from 3 houses, and the third year I will earn $30,000 from 3 more houses. I’ll buy fix and sell a total of 8 houses with a total profit of $80,000.” A real estate investing plan doesn’t have to be elaborate. Your real estate investing plan should be clear and meaningful.
3. Have Realistic Expectations
If you try and ramp up your real estate investing business too quickly you will end up failing. Remember, hope for the best but plan for the worst. As a new real estate investor, you won’t have access to the best deals out there. However, you must know how much you can expect to make on rehabbing and reselling an investment property in your market.
4. Understand Lost Opportunity Costs
A lost opportunity cost in real estate investing is the cost of not taking action or the cost of the money you would have made. Don’t sit on the sidelines waiting for a home run property deal, most successful real estate investors make their profits on hitting a lot of singles over and over again.
5. Don’t “Go it Alone”
By their very nature, most real estate investors are very independent, hard working people. They are also the same type of people who have a hard time asking for or accepting help. There are a ton of free educational resources out there for real estate investors. Find a successful real estate investor in your area and offer to buy them lunch and pick their brain, network with other real estate investors through a local REIA chapter, or track down some agents who have demonstrated success working with real estate investors.
6. Build a Team
The final key to real estate investing success is to build a team. You will need a team of people working in and outside your business that can support you. There are going to be tough days and these are the people who will get you through sticky situations. The better the team you have around you, the greater your chances of estate investing success.