A recent article in Entrepreneur by Brandon Turner summarized some of the important things real estate investors should remember, especially when getting started and running into roadblocks. So, we would like to share some thoughts with you, and hopefully encourage you to grow your wealth through real estate investing.
Education is Vitally Important
No matter how easy it might seem to buy and sell real estate, there’s a lot more involved if you want to churn out an annual profit from real estate investing.
Often, the difference between producing a profit and losing money is knowledge. Successful real estate investors must know how to make the best deals, rehab properties to produce the best results, profitably manage rental properties, and sell their properties for a profit.
Education in real estate investing can come from a number of good sources, including:
- Online publications.
- Print and video publications.
- Industry experts.
Understand the 80/20 Rule
The Pareto Principle, also known as the 80/20 rule, states that roughly 80% of the effects come from 20% of the causes for a given event.
As real estate investors, therefore, we want to apply the 80/20 rule. We want to locate and buy the top 20% of investment properties that make the most money, and reject all the others.
It’s not an easy task to locate and purchase real estate investments that fall within the upper 20% of profitability. So again, education is vitally important, especially education about specific geographic areas, so you invest in areas and in properties that are in the top 20%. For this reason, large real estate investors often rely on regional experts to locate, purchase, manage, and sell real estate.
Develop a Winning System
Systematization is important for all businesses, which means that real estate investors need a system to follow throughout the entire investment cycle.
A poor real estate investing process eventually results in failure. So, it’s important to have a proven system in place for locating, buying, rehabbing, managing, and selling investment properties.
Some of the important components of a winning real estate investing system can include these:
- Purchase price range and cap rate range.
- Cash investment budget for repairs and upgrades.
- Financing strategies.
- Bargain purchase strategy.
- Immediate value increase after purchasing a property and making initial repairs and upgrades.
- Holding period and exit strategy.
- Property management.
Invest for the Long Haul
Investing in real estate is a long-term proposition. It’s not something you do overnight, or do just one time, with any material success.
Real estate investors have difficulties to overcome, with frequent roadblocks making this form of investing challenging. A tenacious attitude to overcome and conquer challenges is necessary to compete and succeed as an investor.
Real estate investing is a long-term career that takes a great deal of commitment, but it also offers a way to amass great wealth.
We hope this brief reminder of 4 simple things you can do to succeed is helpful.
Remember to continue your education, seek to invest in the 20% of properties that are most profitable, develop a winning system of real estate investing, and view your investing career as a long-term commitment.
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