What Our Top Real Estate Investors Have in Common

7 Keys to Their Success

[activecampaign form=1]Real estate investors are dreamers. They see potential where others don’t. They see an open door when others would walk away. They take chances and put themselves on the line, believing if they can stay cool, work hard, and keep informed, they’ll win in the end.

That said, new investors must tread carefully. Hucksters set out to exploit the naïve and overly-ambitious. Success requires a practical and patient mindset, an understanding that making money in the real estate market is not a get-rich-quick proposition.

Here at True Title, we have been fortunate to work with many successful real estate investors and take pride in doing our part to help them achieve their dreams. They’ve worked hard, paid their dues, avoided many of the pitfalls, and recovered from disaster. As we’ve provided counsel and service to some fantastic people, we’ve had a unique vantage point on what makes a real estate investor genuinely great.

In no particular order, here are a few qualities we’ve seen from the best of the best.

1. They Start with a Plan of Action

Successful investors create a roadmap for where they want to go. They take the time to write down their specific focus and target.

They start by asking themselves questions like:

• Initially, what is my target acquisition: its age, its square-footage and layout, its neighborhood?
• What geographic market will I start with? And will I stay in that market as I move forward?
• Do I want to rehab-and-flip my first house, or look for a property to acquire-and-hold for rental purposes?
• What liabilities am I willing to take on: A pool? A property in a floodplain? A higher crime neighborhood?
• What is my ideal purchase price range? Moreover, in what location do I want to concentrate my efforts?

Investors get into trouble when they are open to any deal anywhere. The tighter their focus—and the tighter their margins—the better chance they have of making a profit in the long run.

2. They Assemble a Team from the Outset

Specifically, prudent investors find a good real estate lawyer and accountant. Though they may seem expensive, they can save time, money, and hassle in the long run.

When interviewing lawyers and accountants, investors ask:

• Is this person a generalist or a specialist? (We recommend finding a specialist.)
• How do they charge? By the hour? A monthly retainer?
• Is this firm the right size to meet my needs? (If they’re too large, they might not be approachable, especially in the beginning.)

Also, of course, properly selecting a title company (like True Title—hint, hint) is essential. They can be a valuable partner and resource at all stages of your journey. Many investment properties have title problems. The best title companies work on the investor’s behalf, fight to save deals, and take the time to get to know the investor and his or her needs.

3. They Have a Capital Plan in Place

Every real estate deal is different, so investors need to have a variety of sources from which to draw funds from the outset. In addition, investors need a plan to finance their portfolio for the long term. As opportunities arise, they need access to the following:

• Cash will be appropriate in some deals. It’s great not to have to wait for a loan or jump through a lender’s hoops. With cash, there’s no risk of foreclosure or interest payments. But cash isn’t the only tool available to investors.
• Investors can use their equity. As with all loans, one would be wise to shop around to find the best deal and use a professional appraiser to corroborate the value of the property. And pulling equity from a primary residence may prove too high a risk for some, so investors should make sure they have all the facts and a good plan for repayment.
• Hard money lenders (private individuals or institutions that are not traditional banks) are more concerned with the value of the property than an investor’s personal credit history. Traditional lenders may be too conservative or too slow to react to a time-sensitive acquisition. But be careful—interest rates from hard money loans can be higher, and successful investors plan accordingly. They also need to keep spotless financial records to protect themselves from the slightest hint of impropriety.
• Traditional/institutional lenders provide traditional mortgages, which are often the safest and best option for financing without cash. A good relationship with these professionals is vital to any real estate investor’s team.

Through all of this, professional financial advisors can help investors create a plan to repay loans or help advise an investor through difficult situations.

4. They Cultivate a Local Network

There are many web-based courses and national conferences based around a “guru” who teaches a very specific technique or trend. Some work, some don’t, and it’s hard to tell the difference.

However, other investors near you know your market intimately. They see what’s working and what isn’t. Successful networks look out for each other, work with each other to make deals happen, and keep an eye out for trends that aren’t visible at the national level.

Also, many find a local mentor who already understands a particular region. Mentors can make introductions to other real estate professionals and take personal pride in helping a newer investor along.

5. They Seek Out Knowledge

No one course, conference, or book can give investors everything they need to win. Successful investors draw on every source available to them as they continue their education. They read, ask questions, and keep their eyes open for anything that will help them do their work with excellence.

And because the real estate market can change, they are constantly scanning the horizon to keep informed and ahead of trends. They realize that falling behind can threaten to derail what they have already achieved.

A wonderful source of this information is the investor’s local network, lawyer, lender, accountant, and title company.

6. They Go the Extra Mile

Though it may look like the dream of real estate investment means being able to kick back and work a nearly automated system, that hasn’t been our experience.

The best investors we’ve seen are hard workers. They don’t stop when a deal looks like too much trouble. They’re deal-makers, unafraid of rejection, ready to keep trying when the initial answer is a “no.”

A great title company is part of this equation. Look for a company that isn’t afraid of title issues—one that can get creative when a deal hits a roadblock.

7. They Develop an “Investor’s Mindset”

Great real estate investors aren’t necessarily the ones who make bold moves, buck the system, and cut crazy deals that somehow pay off in the end.

All sorts of personalities can do well in real estate investment, but the best seem to have developed this mindset:

• Humility, knowing they never come to the table with all the answers.
• Patience, realizing that real estate investing is a long-term game.
• A calculating and methodical work ethic, understanding they need to generate and work a plan over many years.
• Flexibility, ready to alter their plan of action as the markets and times change.

In the end, success as a real estate investor is for those with a healthy balance between the willingness to take risks and the ability to appreciate the long-term nature of this pursuit.

Investors: You’re Not on Your Own

If you’re a real estate investor seeking to invest in the greater St. Louis metropolitan area, we’d love to hear about you and how we can help. Send us an email or set up a time at one of our eight branch offices. Tell us what you’re up to and find out how we can help you on your journey!