The Six Things a Real Estate Investor Must Do for Success

As investors we have to be mindful of some basic principles. While knowing the value of a property is extremely important, real estate investment itself can prove to be particularly challenging.

Knowing the true value of real estate is critical, try to do a deal without it and see. The guidance and data within REIAComps.com has consistently shown investors how to determine both solid acquisition value and after repair value to earn lasting profits.

Use the following six things to get a handle on your business before you start pouring money into a real estate investment.

1. You must be honest and realistic when working with others.

If you want to separate yourself from the competition, tell the truth.

There are a handful of opportunities where you can make a large amount of money in a relatively small amount of time. Real estate is one of them. However, it seems these types of businesses also tend to attract the less than desirable.

Buyers and sellers have a right to an honest and realistic explanation of your intentions. If you are wholesaling the property, you can let them know your funding partners will need to see the house and fund the transaction. If you cannot close in their time frame, let them know.

Bending the truth will only make you look like bad or, at best, like you’re incompetent. Neither option is the image you want for your business or yourself.

2. You must define your exit strategy.

Your exit strategy will impact many parts of your business; cash flow, return on investment, marketing and negotiation. To be successful in your real estate business, you first need to define your exit strategy or strategies.

My favorite strategies are the most consistent and conventional methods of investing in residential real estate. This includes buy-fix-and-flip, buy-and-hold and wholesale.

Every real estate investment business owner should pair the strategy with his or her own tools, assets and comfort level. Knowing where you want to go will help to define your next step in the journey.

3. You must consistently review your seller leads.

Leads are the bloodline of the business. The only way to consistently find enough leads to feed your growing business is to consistently market to and buy from motivated sellers. Build a marketing plan based on the types of properties that you want to find. Then implement the plan.

4. You must know your market.

When you first jump into the real estate business, do not find yourself trying to generate deals anywhere you can find them. It will become evident very quickly you won’t be able to engage the entire opportunity pool in a marketing campaign even with a huge budget. So instead of mortgaging yours or some else’s firstborn child, limit your marketing to small specific geographic areas where you can become an expert. I call these areas “target markets.”

Every real estate investment business should have one or more target markets. These are the neighborhoods where you know the types of houses, likely repairs, reliability of potential buyers, property values and pitfalls for everything within its borders.

Knowing your market allows you to identify opportunity quickly and take immediate action when deals present themselves.

5. You must trust your numbers.

Numbers do not lie, so don’t try to fool yourself. It can be tempting to believe that you can trim a few thousand dollars here or there from the cost of your project. That’s why it is important to use a checklist or construction generator with predetermined values on it. When you run your calculations, stick with the values these tools generate. Even though it is tough to walk away from a deal, sometimes the best investment is the property you never bought. Remember this!

6. You must define a process and stick to it.

At some point, your home buying business will generate lots of leads on a weekly basis and wholesaling several properties each month. This will only be possible with some defined processes and procedures. Structure will provide freedom for your business to grow and thrive. If you want a growing business, you’ll need to work on processes which can be duplicated easily.

As you build and grow your business, make sure to keep an eye on what’s important. The use of REIAComps to determine the best acquisition and ARV for every deal you look at is the best real estate decision you will ever make. Don’t for one moment let someone tell you the value of a deal. Use the six musts and let REIAComps show you the value for yourself. Now go make some money!