Christopher Clothier, real estate investing expert, reveals helpful strategies for success that both beginners and experienced investors should follow.
Real estate investors have a massive selection of investment strategies to choose from. They can look at those who have gone before them and try to emulate those successes with tried-and-true methods, or they can strike out as a trailblazer in the business. There are a thousand ways to be successful in real estate investment. That doesn’t mean that there aren’t guidelines investors would do well to follow. Intelligently investing in real estate takes conscious effort, care, and honesty. Here are some tips for making smarter real estate investments!
Know Your Motives
After you’ve been investing in real estate for a while, it can become all too easy to live day to day and lose sight of why you started investing in the first place. Keeping your ultimate goal (along with milestones) in mind will allow you to answer the all-important question – “Why?” – whether you’re explaining it to someone else or finding yourself in need of a reminder.
A lack of focus on your goals will send you off track while keeping them in mind will only move you closer to realizing them.
Know Your Limitations and Stay Within Them
A real estate investor’s limitations are varied. There’s the limitation of capital — not all investors have hundreds of properties to their name or can throw thousands of dollars at renovations on a whim. Know what’s reasonable for your finances and stay within those limits. You may lament the slow progress, but it’s far better than making a financial blunder that you may not be able to recover from.
By the same token, you have physical limitations. “Passive” investing isn’t truly passive. Investors, if they hope to be truly successful, have to expend a lot of time and energy if they want to make the most of their investments. If you try to juggle too many tasks at once, you’ll inevitably crash from the stress of it all. It may take some experimenting to find these limits for yourself, but it’s important to know when to draw the line and stick to what you’re capable of.
Know Your Investment Strategies
You don’t have to try every strategy under the sun. While trying out new investment strategies is good, you also have to streamline. If a plan doesn’t work, try to identify why and adjust accordingly before you get too far. Make intelligent, informed tweaks rather than throwing strategies at the wall until something sticks.
Bandwagon investment strategies are bad news. You have unique investments in what’s probably a niche market. Know what works for you, and understand that not all strategies are universal.
Understand Your Investments
Never invest in something that you don’t understand. Before investing in anything, real estate included, do your homework. Get a thorough idea of how things work before you get financially committed.
Once you have invested in something, you can’t just let it ride, either. Know what’s going on. It’s easy to lose track of details, particularly if you aren’t acting as the property manager for your properties. Make sure that you’re getting regular and thorough updates from your property management team so you aren’t caught by surprise.
Even unsolicited advice should be greeted with a courteous smile, a nod and even a minute or two of consideration. But really, we’re talking about actively seeking out and learning from the wisdom of seasoned investors. Not everything they have done and experienced can be applied to your investments — as every investment is unique — but they’ve been around the block enough times to have some good advice. Seek out relationships with other investors and learn from each other.
You can’t hope to be a successful investor if you’re not constantly doing research. You have to keep up with the ever-changing national real estate market as much as your local market and refresh yourself with information that educates, inspires and encourages you to carry on investing.
For investors to make smart choices in real estate investment, it takes not only careful attention to your motives and investment strategies but staying well-informed and connected to the business of real estate investment as a whole.
Chris Clothier, author of The Turnkey Revolution, manages the development and implementation of sales and marketing for Memphis Invest. He helps potential investors define their purpose for investing in real estate and educates peer companies on best practices in the emerging turnkey real estate industry. He is a contributing columnist for BiggerPockets and an experienced speaker who regularly addresses audiences of real estate investors and business professionals.