Experienced investors share the factors they think are the most important to have success in real estate investment.
Investing in real estate has sort of always been popular, but perhaps never more with the advent of the internet reaching maturity. There’s no shortage of coaches, podcasts, online classes, or YouTube videos of REI gurus willing to teach aspiring investors how to get their start. This article is simple advice on how to be a successful real estate investor – from the perspective of practicing investors running their own business. Whether you’re trying to do your first house flip, or you’ve been in the industry a while, I hope these tips provide some insight and motivation for you.
The truth is, a successful investment company can promise what a lot of people are looking for: passive income, the chance to build a successful business, an opportunity to earn more than any salaried 9-5 would pay them, financial freedom, and more. But anyone who’s making it seem too good to be true should be listened to with caution and taken with a grain of salt.
The truth is – nothing worth doing is easy. Like anything, it requires a lot of hard work, learning, and time. However, I’m a big believer that if we have the right guides, we can avoid some common mistakes and potentially save ourselves a lot of pain. So in this post, you’ll get to hear from a handful of investors as they share what they think are the most important factors to being successful.
If you’re new to investing, I hope this helps you start and grow an ethical, successful business that serves your customers well. I should say from the outset – what you’ll notice here is that most of the tips the investors give, are not immediate, specific, practical ones. None of them felt that any one tactic was the most important driver of success. Instead, everyone was about your mindset: your commitment, your persistence, your willingness to learn or partner with others, etc.
That’s a huge takeaway from the outset. Immediate, 2018 or 2019 tactics will come and go. But the investors who succeed in the long run, are the ones who have their minds right first and foremost.
So without further adieu, here are 8 tips from investors to help you achieve success in real estate investing:
#1 – Make sure you’re passionate about real estate.
“Make sure you are passionate about investing in real estate. As good as you might be at finding deals or rehabbing houses, are you truly successful if you do not enjoy what you are doing?” – Tyler Winn of Winn-Winn Homebuyers.
Tyler has a point.
There are a lot of ways to make money, and this doesn’t happen overnight. Especially if investing is going to be a side hustle for you for a while – it’s going to require a significant amount of energy, time, and investment to get off the ground. Even if that doesn’t mean significant financial investment, most of you are still going to have to be able to juggle multiple jobs and responsibilities for some time before this could become your primary income. One of the ways to help sustain your energy, and maintain focus, is to make sure that you’re really passionate about real estate. As Gary Vee has pointed out, if you love the game for the sake of the game, it goes a long way in helping you be patient, work harder, and endure longer.
If you hate life, but just want this for the money, you may have a hard time ever finding success and really getting good at your craft.
#2 – Never stop learning.
“Be focused and always learning and adaptable. The environment is always changing. Build income short term, and wealth by keeping some assets for long term cash flow.” – Bryce Moore, owner of Liberty House Buyer.
#3 – Care about the homeowner & show compassion.
Brian, the founder of Rock Hammer Investments, urges “don't get emotional but show compassion to sellers, commitment to contractors, and compromise to buyers”. In other words, treat people how you’d want to be treated. It’s that simple.
Don’t make the mistake of thinking that all you need to do is lock in a successful marketing campaign, put up a website or send out some mailers, and you’ll start closing. In many cases, homeowners are discerning, and are shopping around. I’ve seen a number of testimonials on investors websites, video or otherwise, where the homeowner chose the investor solely based off of what Brian is saying.
One homeowner actually said that they after they talked to the investor, they were planning on calling others to get more offers, but they just ‘felt so good’ about this person because of the way they handled themselves. Make no mistake, in that case it wasn’t flashy or pushy sales talk, numbers, etc. It’s simply being warm; caring about the situation the homeowner is in; listening to them; and describing with honesty how you can help them.
#4 – Find unmined opportunities for leads.
“Find the hidden leads! We are in such a competitive market, it is hard to find good quality leads. If you can find the leads, the deals will fall into place whether you are flipping or wholesaling.” – Nick, owner of 321HomeSolutions.
Nick’s absolutely right. If you haven’t noticed by now, competition is fairly heavy in most major cities. There’s no easy answer here, but think early on about how you can branch off and identify new channels for leads. I’m not saying to forget the proven methods (mailers, digital marketing, etc), but their may be new opportunities you haven’t thought of.
For example, could you:
- Partner with real estate agents, and refer clients to them if the homeowner is a better fit for a realtor, and visa versa if the realtor can’t help the homeowner out of their situation.
- Identify a new online marketing channel that investors haven’t jumped into yet, and be one of the first ones on there (Snapchat & Instagram come to mind, or platforms like Reddit).
#5 – Partner with other investors & contractors.
Bronson, who helps run Borrower Solution advises investors that “surrounding yourself and partnering with other successful real estate investors is absolutely vital to ensuring your success. This requires you to understand not just your weaknesses, but also your strengths. For example, I partner on deals regularly with general contractors and builders because we compliment each other well. I understand how to easily mitigate both financial and transactional risk, but I am not the hands-on type that wants to deal with the headaches involved with managing a renovation or construction project. In the end, this allows everyone to specialize not only in what they do best and enjoy, but also maximizes the returns on the investment by minimizing the associated risk.”
Ex-fighter pilot Phil Pirozzi who now runs his New York based real estate company We Buy NY Homes Fast agrees: “surround yourself with a community of other, like-minded real estate investors. Immerse yourself in the subject matter, join all of your local REIA's, and read, read, read.”
Need help finding and vetting a contractor to partner with on flips? This article might help.
#6 – Be consistent!
If you get all the leads in the world, but don’t follow up in a consistent, timely way – you’ll lose them. And if you start working on developing a new marketing channel, but don’t maintain it or invest in it on an ongoing basis, it’s going to shrivel up. Nick, the founder of ND Residential Solutions sums it up well, “the most important thing to being successful in real estate investing is being consistent. Consistently marketing, consistently following up on leads, consistently learning, consistently growing your network and so on. The people I know that are most successful are consistently out there working and doing the things that they know they need to do in order to accomplish their goals.”
And he wasn’t the only professional to cite consistency as one of the biggest needs for new investors. Ken Reed, the owner of Better House Buyers says that “the most important thing to becoming a successful real estate investor is consistency. If you are consistent with your marketing, making offers and learning, you will do deals and make money. My belief is that people who say real estate doesn't work are inconsistent. They start and then stop never having any success. By being consistent you are building momentum and this momentum will carry you to success. Staying consistent with leads can get you an extra 1-10 deals a year depending on your volume of prospects. If you want to be successful be consistent.”
#7 – Be tenacious, and never give up.
“I think the secret to real estate is being tenacious and not giving up. Real estate is not an easy endeavor, I guarantee that you will encounter many failures along the way. You will question yourself and doubt your decisions. You will stress over deals and lack of results. You will lose sleep because your bank account balance is low and you may have to go back to work next month.” – Alex, co-founder of IWillBuyHouse.
This is why it’s so important to learn from investors like Alex and his team; investors who have closed lots of deals, done very well, but will still shoot straight with you. The reality is that what you’re setting out to do isn’t easy, and you need to realize that you’re going to fail, going to make mistakes, going to experience some level of stress or indecision. So arm yourself with the mentality of not giving up, before you go into it.
Seth Godin has a brilliant book called The Dip (you can find it on Amazon), that I highly recommend. But the basic principle is this: anything worth doing will have a dip – a season where things are difficult and painful, and you have to work hard to get to the success and reward on the other side; you want this dip, because it’s what prohibits everyone from being able to do what you do; so in light of this: consider whether you have the desire, commitment, money, and time to make it through the dip ahead of you. If you don’t, and you’ll know you’ll quit, don’t even start. Quit early. But if you can and will make it through the dip, then commit to not quit when the dip comes. Expect it, and anticipate it. Make it through, and you’ll be on the other side, and competitors will have to work as hard as you to make it through.
#8 – Know your numbers, and persistently commit to hitting them.
For Fernando, the founder of RI Cash Homebuyers, the most important thing you need to be successful as a new investor is to know your numbers, then go all in: “you can't just work 9 to 5 and be done expecting results. You can't just make 10 phone calls a day or send 100 mailers and expect success. Many mentors teach you to learn the numbers of the business. If you want to do 1 or 2 deals a month you need to call this many people, and send this many mailers, or whatever marketing you are doing, and then figure out how much you have to do on a daily basis so you know what you need to be doing every day to achieve your goals.”
Chris Waits, the owner of WeBuyFtWorth agrees, “knowing your numbers and staying consistent and educated on what's going on in the market.”
Many of you have probably watched Gary Vee’s content, but if you haven’t, I highly recommend it. The funny thing is, after watching and learning from him as long as I have, I’ve seen how much people are looking for a magic button or solution to make their business more successful. I can’t tell you how many times I’ve heard someone ask Gary, “how do I get more customers to my …” (or a related question), and him respond with “send 100 direct messages a day on Instagram” or “call 50 people a day, every day, for 6 months”. People look overwhelmed sometimes, because it seems like a crazy amount of work, that’s needed to be put in so frequently and so consistently. But that’s the simple math of it.
What about you? Are you looking for a magic, easier solution to fix your lead needs? Or are you willing to put in the daily, weekly, consistently work needed to get where you want to be? Achieving success in real estate investment is going to be more than just following this year’s hottest “tactics” to get leads. Long term success is more about your mindset, your heart and service towards customers, building trust, and being willing to go through “the dip” to make it to the other side. At least, that’s what these pros think.