• 7 EFFECTIVE HABITS OF HIGHLY SUCCESSFUL INVESTORS!

  • I love real estate investing.  Over the last few years I have learned from many investors, which got me thinking about some of the successful investors out there – what separates them from the rest? I started to study these individuals and have realized that they all share the same habits and traits that make them successful investors.

    Becoming successful at anything requires skill, determination, education, motivation and most of all a great desire to be great at that one thing.  Becoming a successful real estate investor is no different!  Thus these 7 traits have come to define many of the successful investors that I have studied.  For this post I have defined 7 traits but I am sure there are many more.

    ID-100179235 copy

    HABIT #1 – THEY TAKE THE TIME TO LEARN

    All of the investors I spoke to or studied have taken the time to learn about investing, whether that is through reading something new everyday or attending meetup’s or even running meetup’s themselves. They also take the time to learn from other successful investors and/or they all have mentors, who they continue to learn from as well! They never brag about their portfolio’s and always keep their end goal in mind! They make decisions about each acquisition on whether that next purchase will get them to their goals or keep them from reaching their goals. Finally, they all have a “why” for doing this and they keep that in mind always!

     

    HABIT #2 – THEY HAVE A “CAN DO” ATTITUDE

    For this group of investors, the word “can’t” does not exist! They have a “Can Do” Attitude! If what they are striving to achieve does not work the first time they keep working at it until they find the solution. For instance, one guy shared with me how he ran out of money after his first deal and initially thought, “well that was fun but now I’m done”. He took a step back, realized that there was another way to work his system and started raising money doing JV deals instead. In just 18 months he built a portfolio of 12 properties.

    Was it easy? NO!
    Could he do it? YES!

     

    HABIT #3 – THEY FIND AN INVESTMENT STRATEGY AND THEY STICK TO IT

    Many of the successful investors find ONE strategy (Rent to Own, Buy & Hold, Flipping) and stick to it! They research the markets they are interested and then narrow that down until they find the area they want to focus on and then dominate that market. They learn everything there is to know about “their” market, such as market rent, GDP, the job market, plans for new infrastructure, etc etc. This group of people understand macro and micro-economics of their market and they don’t stray from it. Once they have dominated this market they then replicate their system in other markets. That brings up another point – they all have a system they follow. Without systems you have nothing and you leave it all to chance. Successful investors don’t leave anything to chance and they never leave money on the table – ever!

     

    HABIT #4 – THEY ARE CONSTANTLY LOOKING AT AND ANALYZING PROPERTIES

    Successful investors know that it takes a process and for every one property you eventually bid on, you have had to analyze at least 100 properties. Some would say that this is a lot of work – but once you know the fundamentals of what you are looking for, you can focus on specific parameters, such as NOI (net operating income) and GRM (gross rental multiplier) to name only two. Most successful investors have devised a quick cheat sheet or quick calculation to quickly analyze these properties. If the analysis does not result in a positive cash flow, they quickly move on to the next one.

     

    HABIT #5 – DUE DILIGENCE IS EVERYTHING

    Successful investors know that finding a property is one thing, but doing your due diligence is another. That term gets bandied around a lot but what does it actually mean? Well for one, they look at the numbers and don’t trust them as anything other than numbers to sell the property. They look at the rent rolls, utilities and the bank deposits for the true picture of how that property has been performing. This all happens during “the due diligence process” after the offer has been accepted. They will look at market rents and see how the rents in the property measure up. They will know that in order to bring up those rents to market prices, it may mean renovating and they will factor that into the purchase price. This is the biggest and most important step!

     

    HABIT #6 – THEY KNOW HOW TO BUILD A TEAM

    Successful investors know that they cannot do this by themselves – just like it takes a village to raise a child, it takes a team to raise a successful investor. Ask any investor out there and they will always talk about their team. How is the team made up? Who is on their team? A few key people make up the team, such as a real estate sales person, who knows a market inside and out and who can offer up pocket listings (listings that are not on the MLS); a mortgage broker, who is also an investor and understands the importance of analysis and how to structure the financing so that the investor can cash flow; a lawyer and one that understands the intricate structures around corporations and holding companies and how they can affect financing as the investor grows his or her portfolio; an accountant that understands that on the one hand, they are showing this investor how to claim everything they can but on the other hand how claiming everything on taxes changes the game from fully qualified to a stated income investor – meaning higher interest rates and lower cash flow; a property manager, that understands how to manage tenants, when to raise rents, how to maintain the property efficiently and also understands how to navigate the Landlord Tenants Laws. A good property manager will enable the investor to focus on building his or her portfolio, while taking on the day to day operations.

     

    HABIT #7 – THEY ALWAYS HAVE A WELL DEFINED EXIT STRATEGY

    Successful investors are always thinking ahead of the game not when it is too late. They know that before they purchase a property, they have an exit strategy planned. For instance if they purchase a property for a rent-to-own but the tenant buyer ends up not being approved for financing, they can turn the property into another rent-to own, with a new tenant buyer or turn it into a rental. They always keep the end in mind!

     

    Is it your goal to be a full time investor? Take the time to learn from those in your network – they are more than willing to share! Remember all successful investors started somewhere and they got to where they are by being steadfast in their goals, learning from others, having mentors, sticking to a strategy and finally knowing when to get in and when to get out!