Do you have what it takes to be a successful real estate investor?
Chances are good you have at least some of the building blocks in place. After all, real estate investing isn’t rocket science. Hard work, perhaps, but nothing investors with the right mix of personality traits and professional capabilities can’t handle.
About those personality traits and professional capabilities: They’re not particularly hard to come by, for the most part, but finding them all in the same person is somewhat rare. Most real estate investors must work on at least one or two of the items below. Where does your skill set need the most work?
Call it drive, doggedness, hustle — whatever you prefer, it’s an essential trait for successful real estate investors, and it’s frustratingly difficult to teach.
If you’re seriously contemplating an active real estate investment, you’ve probably got some baseline drive already. Whether it’s enough to get you where you want to be is another question.
Comprehensive Local Market Knowledge
Local market knowledge can be taught, but it takes time to perfect. The best course of action for aspiring real estate investors is to stick with what they know at the outset and invest close to home. In major markets, there’s plenty of opportunity to be had; many Florida real estate investors confine their investing activities to the Sunshine State, for instance.
Enough Capital to Get Started
How much capital depends on your objectives, of course. But, unlike owner-occupant buyers, smaller-scale real estate investors generally don’t have the luxury of excessive leverage — the FHA doesn’t lend on investment properties.
Financial Expertise (Or a Partner With the Same)
Speaking of money: Successful real estate investors generally have more financial fluency than the average consumer, or take on partners with such fluency. Running cash flow projections and balancing the books on a portfolio of properties can get complicated, fast — even with bookkeeping software.
Reasonable Expectations for Profit and Cash Flow
With regards to profit and cash flow potential, prospective real estate investors must keep expectations in check. Contrary to what you might hear in breathless radio spots, real estate investing is not a path to quick riches.
An Eye for Opportunities That Others Might Miss
Successful real estate investors are adept at seeing opportunity where others see only problems. Your risk tolerance will determine precisely how far out on a limb you’re willing to go to pursue an opportunity, but this business is not for the timid.
Do You Have What It Takes?
If you already have — or are willing to acquire — the attributes and prerequisites on this list, you’ll be well on your way to real estate investing success.
But that’s not the end of the story. The hard truth about real estate investing is that, more often than not, luck plays a role. In moments of candor, most successful real estate investors will admit that at least some of their upside came because they were in the right place at the right time.
You can’t teach luck, unfortunately, but you can do everything possible to set yourself up for success. As the saying goes, fortune favors the prepared.