The Seven Habits of Highly Successful Real Estate Investors

Conditions now exist for near risk-free real estate investing in some areas of the United States. This has created great income opportunities for knowledgeable investors (and their clients) that perform the proper due diligence, develop a sound investment model, engage/manage the correct resources (people and organizations) and execute associated business transactions in an expeditious manner.

So, what separates those who succeed at real estate investing and those who are less apt to produce a winning formula?

That’s contained within, “The Seven Habits of Highly Successful Real Estate Investors”:

1)Strong Financial Background and Experience
The ability to develop a sound real estate investment financial model is imperative. All financial aspects of the investment: income, built-in equity, fees, other costs, etc., must be fully comprehended and considered with regards to their overall impact on profitability for the investor and the model. All accrued equity, rental payments and money not spent goes directly to the investor’s positive bottom line.

2) Superb Business Infrastructure
Creating an infrastructure which supports every element of the business model must exist. The ability to engage and effectively manage realtors, mortgage lenders, property appraisers, home inspectors, title companies, renovation contractors, property management companies, etc., is necessary. Strong administration must be in place and operate in a very efficient manner, keeping track of status and managing the progress of all associated tasks and costs.

3) Thorough Market Comprehension and Analysis
Determining the U.S. cities and communities which represent the greatest return and security of investment is paramount. Some areas of the country have begun doing a marvelous job of incenting companies to move their corporate headquarters and operations to their states. When that occurs, that city’s job market quickly improves, people move to the area and the demand for housing increases. The overall economy around the involved communities begins to prosper once again and property values appreciate.

4) Strong Support Team Assembly
The support necessary to properly complete and administer real estate investment deals includes property managers, contractors, insurance agents, certified public accountants, attorneys, title companies, funding sources, realtors and more. Business partnerships must exist between the real estate investor and each of these entities. Oversight of performance must be ongoing and proactive identification of replacement (backup) providers for possible poor performance must also be completed.

5) Well Executed Property Management
Whether performed by in-house staff or via relationships with outside companies, property management is a critical component for the successful real estate investor. The prudent choice of markets often dictates that investment properties exist in areas outside of where the investor resides. A reliable management strategy to handle events requiring attention for real estate properties is crucial.

6) Risk Mitigation and Aversion
The selection of appropriate markets which enable the investment model to succeed is key. Locating high value properties, establishing renovation costs and buffer beforehand, pre-inspections, proactive rental analysis, repair reserves, built in equity assurance, etc., ensures risks are mitigated; a very important habit of the successful real estate investor.

7) Client Focused
Companies which provide a real estate investment vehicle for clients should be able to make the first six habits nearly transparent. Most clients prefer to be investors, not landlords. Once committed to an investment, their desire is to receive monthly statements and their passive income checks.

And when the client experience is consistently positive and profitable, they’ll return to invest in additional properties to generate even more positive cash flow for themselves. They’re also likely to tell their friends.

Clearly, there are many “moving parts” a successful real estate investor must address. An appropriate plan and its execution must be in place for each item or risks increase. With the right infrastructure, experience and when performed properly, the investment model is (relatively) easily replicated. When looking for a company that provides a turnkey real estate investing solution, it’s important to ask for a presentation of their real estate investment model and information regarding their past performances…