7 Essential Traits of Successful Real Estate Investors

Daniel Penzing
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Real Estate Is a Tangible Investment

Real estate is the ultimate tangible investment. Producers of intangible goods and services are more challenging to diversify because they depend on specific clients, customers, and targeted demographics. Because of its tangible nature, real estate offers those who invest in it the ability to diversify their investments across many properties and multiple areas. For this reason, it is possible to offer some protection against geographic risk.

Real estate is also more tangible than the stock market. Investing in real estate offers a unique experience. You will be able to see your property and live your investment in the community that you choose. In addition, you can invest in properties that may have rental income flowing into your account on a regular basis. Investing in real estate also allows you to benefit from tax advantages such as depreciation.

The 7 Traits All Successful Investors Share

Are you interested in making money by investing in real estate? Are you someone who constantly burns through your paycheck with the hopes of generating more income and being further financially independent? If so, you are not alone.

Many people become very interested in real estate investing after looking at how successful and wealthy people have it. The difference between the rich and the poor is that the rich invest in themselves and the poor spend their money on things.

By investing in yourself you make the most effective use of your money. You invest in yourself to become better at your profession, boost your creativity and are able to wear a lot of hats. These skills are essential for any successful investor.

But there are seven fundamental traits that any successful real estate investor must have. If you can adhere to these traits you will have a much better chance of becoming a successful real estate investor.

#1: They’re (calculated) risk-takers

Before you start investing in real estate, you’ve got to accept the fact that homeownership, generally, is a risky business. Even if you invest in the stock market, the greatest and longest economic boom in human history recently ended. There are ups and downs. There are financial crises. There are stumbles, there are setbacks, and there are losses.

If you’re not a risk-taker, there are plenty of other ways to build wealth. A great example: the stock market, where you make money without risking loss of the asset on which you’re earning that money. But if you do want to invest in real estate, you’ve got to be prepared for the reality that you’re going to take risks.

There are ways to mitigate those risks, such as by investing in a diversified portfolio of properties that you’ve thoroughly evaluated, and by putting in place plenty of exit strategies (i.e., quick ways to end your investment) that enable you to cut your losses if you choose.

But just because you can mitigate the risks, it doesn’t mean the reality of the situation should be overlooked. You’ve got to be a risk-taker to invest in real estate.

#2: They’re skillful — and respectful — negotiators.

Skillful negotiators become successful real estate investors because they can get deals closed. That means managing the business side of real estate investing and ensuring that when one deal ends, another opportunity is on the horizon.

One way to do this is to be a skillful negotiator.

The ability to negotiate creates a reliable pipeline of money and accrues value into the business. That’s why this trait is number two on our list.

On paper, it seems simple to negotiate. We follow the lead of our principals. We use the properties we’d like to sell and those we want to buy. For us, it’s a no-brainer. But then there’s reality.

Successful real estate investors negotiate deals every single day. They have to be able to negotiate at scale, and this is where skill comes into play. Skill is gained from practice, just like any other skill.

Remember, many of the skills necessary for real estate investing are skills you already have—as long as you don’t let go of them.

#3: They’re both humble and stubborn.

The best investors are both humble and stubborn. They’re humble in the sense that they understand they don’t know everything. All they can do is listen to mentors and educators and then try out the theories they learn. They are stubborn and driven in the sense that they are committed to the process of learning so that they can learn how to consistently make a good living.

Both of these traits are apparent in the top real estate investor in the world Ray Davis. We sat down with Ray to discuss which traits were more important.

Compassionate, Ray said, is the trait he has to work on the most. He describes himself as competitive, relentless, and sometimes impatient as a person. He works on not being impatient so that he can work towards his goals in a healthy and sustainable way.

He also talked about how the financial crisis of 2008 and 2009 made him seriously consider giving up, and that it was one of the lowest points in his career. He saw friends and business partners lose their jobs, and others lose their entire life savings.

“I just didn’t know if it was worth it,” Ray said. “Is this just a game you’re just going to win once?”

#4: They’re focused.

A lot of people start out in real estate with a general goal of making money, but for successful investors, that goal is laser-focused: It’s about the numbers, the details, and the profit. How many deals have you passed up or kicked out of your pipeline because they didn’t meet your strict criteria?

If you’re just starting out and are still casting a wide net, that’s perfectly fine. But if you’ve been in real estate for several years or more, keep a close eye on your stress levels. If you feel like you’re jumping from one idea to another with no clear plan or even a general target number, it’s time to do a gut check. Ask yourself the following questions:

Is there a business you started that has yet to become successful?

Have you ever asked a question like: "How do I become a real estate investor?" or "How do I start a real estate investing business?"

Have you ever felt stressed out by the amount of money you owe other people?

If you answered "yes" to any of these questions, you may have become too scattered to be successful. That is why so many people fail in wealth building and investing because they are trying to reach too many goals at once.

#5: They’re good at multi-tasking.

Real estate investing isn’t passive money-making ‖ it’s a full time job that involves lots of active work.

Many investors complain about having to put in so much time and effort to profit from real estate investing, but the strategies they use would produce fantastic results if they had unlimited time.

Real estate investors, on the other hand, often don’t have the time to haggle over getting a good deal, or to research every single investment opportunity, or to network and develop friendships with other real estate investors and professionals.

Real estate investors are always swapping between more than one task – between real estate shopping, phone calls, business management and so on.

They’ve built strategies that ensure they’re able to succeed, even on a busy schedule, by cutting out time wasting tactics that their competition can’t afford to do.

#6: They’re willing to put in the effort and time.

One of the characteristics of successful real estate investors is a willingness to put in the effort. A lot of people think that they can just draw up some plans and invest in real estate and they will be luck to win the lottery and become rich. Unfortunately, it doesn’t work that way.

The best real estate investing comes from hard work. You have to make sure you’re putting in all the effort you need to in order to get the results you’re looking for.

It’s hard work but it’s worth it.

#7: They do their homework before making an offer.

Is the location great? Is the house in good shape? Will it be affordable to mortgage in the long run? What will it cost to upkeep or fix anything that’s wrong? Do they have issues with flooding? Will it fit the needs of your family? What is the tax rate in the area? How much traffic on the road outside the house?

Successful investors won’t make an offer until they’ve done their due diligence. For some, that just means a drive-by, but if you’re going to pay more than the asking price, you need to know everything.