Anyone with enough money can invest in real estate, but that doesn’t necessarily make them a successful real estate investor. If you want to make the most of your real estate investment, you must have the proper skills. You must be able to work with people, understand real estate, and know the numbers to name just a few of the basics.
Check out the top 5 skills you need to make you a successful real estate investor.
You’re going to talk to a lot of people as a real estate investor. Sellers, real estate agents, contractors, finance companies, and inspectors are just the tip of the iceberg. You must be great at networking too – talking to people you’ve never talked to before and getting the word out that you’re a real estate investor actively looking for new deals.
Communication skills are key. You have to know how to demand respect, negotiate, and manage everyone’s time. Without proper communication skills, even the best investment could fall apart at the seams.
Investing in real estate has a lot of moving pieces. If you’ll buy and hold, you’ll manage not only the sellers, inspector, financing process, and the closing, but you’ll also manage tenants after the sale. You’ll be responsible for the property’s condition, collecting rent payments, and staying on top of the property’s finances. You must know how to handle tenants that don’t pay, emergencies with the home, and sudden vacancies.
If you buy and flip, you’ll need to manage all aspects of not only buying a home but fixing it up and selling it too. You’ll deal with a ton of people through the process. If you aren’t organized and able to manage all the moving pieces, the investment could fall apart. You must know what to anticipate, how to act fast to fix the issue, and how to move the process through quickly.
Real estate investing is all about the numbers. Just like in the stock market, you want to buy low and sell high. If you’re buying and holding, you want to buy low and make enough money on the rent that it covers your costs plus leaves you with profits.
If you can’t budget, you could end up in the hole fast. Home renovations, closing costs, and real estate agent costs are just the start of what you’ll pay. If you can’t manage the money coming in and out, you won’t know if you’re coming out ahead or losing out on the deal.
Knowing how to budget and how to check out a deal BEFORE you invest in it will leave you with the best results. You’ll be less likely to enter a bad investment (although it happens to everyone) and if you do, you’ll know how to get out of it.
Choosing The Right Professionals
No one can go through the real estate investment process alone. You’ll need a large number of professionals helping you including:
- Real estate agent
- Bank or lending institution
That’s just the start of who you may need to help you with the process. If you don’t have a sense for choosing the right professionals, you could quickly go upside down on the deal. Do your research, and find professionals with a good reputation and affordable costs. The two go hand-in-hand when you’re investing in real estate. Look for motivated seller leads. These leads are great for investment.
All investments have risks, but if you don’t understand them or can’t read them going into the investment, you could make too many bad investments, leaving you upside down.
You need a keen eye for detail and the ability to understand what to look for should things go wrong. When you understand the risks, you’ll do what you can to offset them if possible. Worst case scenario, you’ll have an exit strategy to get yourself out.
Let’s imagine you’ve identified a $100,000 fixer upper in West Hartford, and you have enough money saved to cover the down payment. In this case you would still need to:
- Setup your budget
- Find a hard money lender in Connecticut to buy the house outright
- Select a suitable contractor and plan high ROI renovations
- Complete the rehab quickly, without sacrificing the quality of the workmanship
- Sell the house quickly, in order to maximize the net profit you make during the deal
When the process is outlined in bullet form, it can be a lot less intimidating than what you might imagine. In reality, all you’re doing is buying a poorly maintained home, upgrading it, and then selling it for the profit. Of course there are additional complexities to consider, but from a high level perspective, real estate investing techniques like house flipping can be boiled down to a few key essentials that are easy to understand.
Do You Have What It Takes To Be A Real Estate Investor?
You don’t have to do real estate investing alone, but you must be able to spot the right professionals and know when you’re losing out on the deal. If you either have what it takes or have the ability to learn the skills necessary, you can make a decent living out of real estate investing, as long as you keep your wits about you. Successful flipping tactics usually come down to the investor’s personal experience, and how thorough they are when doing their homework.