5 Shared Traits of Successful Real Estate Investors
08 30 2017
Anyone can get started investing in real estate – there’s no degree or certification required to start closing deals. While research and a thorough understanding of one’s financial situation are crucial to performing due diligence into the real estate investment opportunities you may encounter, long-term success requires a set of key characteristics.
As with many endeavors, education or raw talent doesn’t matter as much as the drive to succeed does. While every real estate investor is different, there are a handful of common traits that the most successful real estate investors all seem to possess.
The 5 Shared Traits of Successful Real Estate Investors
If you have these qualities, real estate investing might be for you. If you don’t, no worries – most of these are qualities you can work on cultivating.
Real estate is one of the most expensive purchases an investor can make; one ill-advised or poorly managed deal could be catastrophic. Being a successful real estate investor requires a great deal of discipline to ensure each step of the process is managed efficiently and effectively.
The best investors approach real estate as a business; as with any business, this starts with making a comprehensive plan that outlines short- and long-term goals and includes actionable and realistic steps to make them a reality. Compared to other types of investments, it’s easy to get swept up in the emotional aspect of real estate; before closing a deal, it’s essential to make sure the investment makes sense based on hard numbers rather than your gut feeling. “Falling in love” with an investment property can lead to a real estate investing mistake, plain and simple.
Beyond fastidiously vetting potential deals, successful real estate investors also understand and follow the basic principles of money management. Disciplined investors go for quality over quantity – it’s better to pass up nine average deals, where the margin for error seems too narrow, in pursuit of one great one. They understand their limits, and they know when to walk away from a deal if it’s outside their level of experience or capabilities. Many also choose to focus on one niche, such as flipping houses or leasing office spaces, so they can acquire a depth of knowledge in that area that sets them apart from the competition.
Just as important as having a clear plan going into an investment is knowing when to deviate from that plan. In all types of businesses – but in real estate especially – even the most seasoned investors aren’t immune to sudden, unexpected curveballs. What matter is how you respond – how quickly can you pivot and adjust your plan to make sure you stay on track with your goals?
Many successful real estate investors approach real estate opportunities with a contingency plan and range of acceptable outcomes in the instance something changes. While these unexpected changes can be frustrating, those who are willing and able to roll with the punches are much better positioned for success.
Although there is no formal code of ethics in real estate investing, upholding integrity is incredibly important. Real estate is a people-driven business that requires working with numerous third parties, from real estate agents and brokers, to contractors, to lawyers and accountants. Many deals are made based on word-of-mouth and referrals, so maintaining a positive reputation is critical.
The most successful real estate investors are honest. While embellishing the details is not uncommon in real estate, cultivating a reputation for being open and transparent will pay off in the long run over the duration of your career.
As mentioned above, even real estate investors who work alone must know how to collaborate with a variety of third parties. Part of being a successful collaborator is knowing when to bring in outside help. For example, tax laws are incredibly complicated, and mistakes can be extremely costly. Most real estate investors don’t possess adequate knowledge in this area and choose to work with an accountant to make sure they’re employing the most tax-efficient strategies.
Communication skills are essential throughout every step of real estate investing, from negotiating prices, to working with contractors, to dealing with tenants. Negotiating – figuring out ways to compromise with other stakeholders while feeling like you’re still getting a good deal – isn’t a skill that comes naturally to many people, but it’s one that the most successful investors have cultivated over time.
Lastly, many of the top real estate investors have built a network of other investors, whether through a professional association, in an online community, or more informally. It’s important to have a network of like-minded professionals to encourage one another, exchange advice, and provide referrals.
Of the qualities we’ve mentioned, passion is probably the most important. Real estate investing is not a get-rich-quick scheme; it carries substantial risk, requires a willingness to ride the ups and downs of the market, and takes a commitment to lifelong education.
Successful real estate investors are constantly learning more about the business – everything from how factors like interest rates and supply and demand affect real estate prices, to marketing strategies and management skills. To be successful, real estate investors must also follow the market, relevant laws, regulations, terminology, and new technology. Those who lack passion will quickly find real estate investing an unsustainable pursuit; those with passion are more likely to find long-term success.
The Bottom Line
Of these five traits, the only one that can’t be developed is passion. The other four, however, can be learned through practice and experience. Although there are many different ways to be successful within real estate, you’ll be selling yourself short if you don’t develop these traits. While anyone can get started with real estate investing, not everyone can succeed. Which group are you in?
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