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Five Keys to Reaching Success as a Real Estate Investor

Success in real estate investing comes like success in many other fields; through hard work and continual effort. Every real estate investor can tell of a fortunate break here and there, and most are reluctant to take credit for success, but all can attest to the fact that perseverance was a necessary component. Given that, here are 5 ways to persevere and triumph in real estate today.

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Recognize Changes in the Real Estate Market

Strategies that have worked in the past may not work today. Mortgage rates have been and continue to be very low. In addition, there is a lack of starter homes on the market. Successful strategies in real estate investing will be based on these and other current market conditions for a particular area. Flip strategies, for example, might focus on cleaning up starter homes rather than upgrades to move homes into higher priced market segments.

Online tools are also playing a greater role in the real estate investment business. Learning to access resources through the internet is a change for many investors. Using video made by drones to market properties was unheard of only a year or so ago, but is now almost a requirement for high-end properties. Finding drone operators is easier on the internet than anywhere else.

Diversify Real Estate Investments

Continuing to do the same size and type of real estate transaction is a comfortable approach, but it can also be very limiting. The type of property for that transaction may not always be available. It is important to stretch investments to a different scale or market segment. This brings diversity to the portfolio as well as economies of scale.

However, it is important not to over leverage properties or invest in unfamiliar strategies. There is a balance in this area that should not be ignored. Starting small is wisdom, staying small is safe, but growing too fast is dangerous. Success means taking measured chances to grow.

Conduct Due Diligence on Real Estate Transactions

Overcoming difficulties in real estate investing can be a double-edged sword. While it leads to success, it can also breed complacency. Experience is a great teacher, and one of the lessons it teaches should be the need to do fundamental research on each and every real estate transaction.

There will always be unexpected developments, but the more groundwork the real estate investor commits to a project the more likely a favorable outcome becomes. Uncovering problems early leaves more time to develop solutions, or can even create the possibility of walking away from a bad investment.

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Consider Taxes on Investments

As has been said, “It’s not what you make, it’s what you keep that counts.”  Income taxes can become a significant drain on the return earned on investment real estate and have to be included in any calculation. Unfortunately, tax laws are complicated and confusing.

However, they also include some significant benefits for real estate investors. Understanding how to structure transactions to maximize these benefits can improve the after-tax return. Learning to keep an eye on income tax considerations is a must for a successful real estate investor.

Set Aside Time as a Real Estate Investor

Anyone starting to invest in real estate begins with enthusiasm and dedication. However, this can wane over time as the demands of life, and probably a full-time job, begin to take a toll. Often the number of hours spent on evaluating opportunities or developing properties also begins to dwindle.

Success in real estate investing requires dedicating blocks of time to do the necessary research, paperwork and legwork. This can mean pushing other things aside to protect those blocks of time. Discipline in time management is an absolutely critical skill that has been mastered by every successful real estate investor.

This list is not exhaustive. Activities such as always exploring new ideas and developing new networking contacts could have been added. However, the 5 ideas listed here are great ways to grow as a real estate investor. They cover the basics and pave the way for greater success in the future.

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