The thought of becoming a real estate investor probably seems like a pretty lucrative opportunity. After all, the title alone sounds sophisticated as it rolls off your tongue. There definitely is money to be made in this market, but that does not mean it is not without its challenges. Below are a few things you need to know if you are going to be successful.
1. Establish a Target Market – Getting to know your market is a lot harder than you might think. You may assume that focusing on your town or city is a small enough market, but it’s not. Quite often, a mile can mean the difference between an affluent neighborhood and one that is experiencing a serious decline due to increased crime rate. Focus on a neighborhood and learn everything about it, including the house styles, targeted buyers, common repairs, etc. You can always expand and add other target markets once you learn everything you need to know about this one.
2. Appreciate Leads – Every lead is vital. One that may seem like a waste of time or dead end could end up making you a lot of money in the future. That being said, it is your responsibility to market for leads. Determine the types of properties you are looking for and then develop your marketing plan based on those goals.
3. Determine Your Exit Strategy – Cash flow, marketing, negotiating, and return on investment are all going to be dictated by your exit strategy. If you don’t have any long-term goals established, you will struggle to stay on track.
4. Know When to Walk Away – It is vital that you know when to walk away. The numbers don’t lie, so if the black and white evidence is telling you to pass on the deal then that’s the right decision.
5. Define Your Processes and Procedures – Have you ever noticed how once you become comfortable with something you start to neglect the basics? Maybe you feel you no longer need to make every step, so you cut corners. If you want your business to grow, you will need defined processes and procedures.
6. Speak the Truth – There are enough real estate investors out there that don’t seem to even know what telling the truth means. Maybe they are so used to stretching the truth or telling little white lies that they don’t even realize when they’re being dishonest. Buyers and sellers will respect you more if you are completely honest, even if you are telling them something they don’t want to hear.
7. Don’t Over-promise – Always under-promise and over-deliver. You are always better to exceed someone’s expectations than to let them down.
Learning everything you need to know about being a real estate investor won’t happen overnight. However, you will have a great chance of being successful if you learn everything you need to know about your market, define your processes and exit strategy, and know when to walk away.