Real estate has proven itself a highly valuable vehicle for wealth building since the dawn of mankind. However, for every success story of an individual making it big in real estate, there are dozens of wannabes who have tried – and failed. What is it that sets the winners apart from the losers using this strategy?
Over the past decade of investing in real estate and engaging with investors both successful and new – I’ve noticed certain patterns that stand out in the most successful. I’m not going to tell you that every successful person has the exact same traits BUT there are certain traits that seem to run together in the most successful. The great part is, however, that each and every one of these traits can be developed in you! This post is going to look at nine things that successful real estate investors do differently – and how you can do the same.
Like the best students in your grade school class, the best real estate investors are the ones that do their homework. They read all the information they can get, they listen to podcasts (like the BiggerPockets Podcast!), talk with experienced investors who have come before, and actively engage in the real estate industry whenever possible. Many of the wannabe investors try to jump into the game after watching a late-night get rich quick” infomercial from a salesman driving a shiny red convertible but fail to take the time to actually learn the details of the industry.
It’s not practical to drive from New York City to Lima Peru simply knowing it’s “somewhere South.” So why do so many investors try to reach retirement by knowing it’s somewhere up ahead? Successful real estate investors know that to reach their destination in the shortest and most efficient time – they need a plan. Will the plan always be 100% right? Of course not. However, a plan keeps you moving in the right direction and focused on the destination rather than the shiny objects you’ll pass along the way.
Success is rarely built on the back of a loner. Successful investors know that victory is found through teamwork, and as such, they seek to surround themselves with people who have more knowledge than they do about specific tasks. For example, any person can figure out how to do their taxes; the most successful investors, though, know to call upon the best CPA they can find, knowing that the knowledge that CPA can bring to the table is worth more than the bill received.
There’s nothing wrong with swinging a hammer, and knowing how to do your own work is a good feature to have as an investor. However, an average investor can swing just one hammer or paint just one wall at a time. The most successful investors I’ve seen have learned how to manage their real estate business AS a business, not as a hobby. They create systems to help run or automate parts of their day to day work, as well as find ways to outsource the less-desirable work.
Greed has caused the downfall of more than one real estate investor. That downfall is typically caused by those attempting to bite off more than they can chew. Successful investors understand where they are at in life, what they can do, and what they cannot. For example, jumping into the ownership of a fifty unit apartment complex before ever knowing the basics of owning one house can be a recipe for disaster. The same could be said for those who think they can afford a certain monthly payment but quickly find out it’s too much, forcing bankruptcy, foreclosures, and ruined lives.
Real estate investors are a lot like dieters – certain diets come and go, but the ones who truly keep the weight off are the ones who don’t simply follow a diet but follow the principles of healthy eating and regular exercise. The most successful investors seek to understand the rules that govern solid investments (such as obtaining great cashflow, buying in good locations, and not being too risky) and use those rules to make money in any market. They don’t get swayed by the popular opinion of the day, but keep an eye on the local market and fine tune their business to meet the demands and special circumstances that the current market presents.
The “get rich quick” devotees rarely make it anywhere in real estate. The ones who find lasting success are the ones who plan on being in the business for the long haul. Making a quick $20,000 on a flip might feel great and provide for a nice vacation or a new car, but the long-term investments are what provide for years of passive income during retirement.
It may seem counter-productive, but the most successful investors don’t hold their cards close to their chest. Instead, they seek to help others and give back, recognizing those who helped them when they first began. They take younger investors under their wing and offer to help provide a listening ear or good advice when needed. I’m not referring to paid coaching or some kind of program – but simply a friendship often over a cup of coffee. Many of these successful investors have found that by helping newer investors, they are in-turn energized to become even better investors themselves.
Every investor will face tough times. The investors who seek to work their way through those problems are the ones who truly find success in this business. It’s easy to quit when you’ve heard “no” from a dozen different banks, or had the last twenty offers rejected. Success in real estate is found through continual persistance during trials and finding creative ways to get through.
Building wealth is not a mystery. There are no “secrets,” despite what many of the real estate gurus would have you believe. Instead, there are simply patterns. If you apply the traits exhibited by the most successful investors to your own life, you too will find success.
Do you have any additional traits you’ve noticed that the most successful investors seem to have? Add them below in the comments and let’s talk about them!
Brandon Turner is an active real estate investor and the head of community at BiggerPockets.com, the real estate investing social network. Brandon likes writing epically long blog posts, like this one about tenant screening or this one on renting out your house.
Photo: JR F
Blog post compliments of the CenterCityTeam Philadelphia Real Estate Blog
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Frank L. DeFazio, Esquire
Prudential Fox & Roach Realtors – Society Hill
530 Walnut Street, Suite 260
Philadelphia, PA 19106