Well, real estate is always good, as far as I’m concerned.
Real estate investing is one the pillars of wealth creation in the world today. The last time I looked at the Forbes list of 400 richest Americans, I could still count over 31 Real estate tycoons listed as billionaires.
In the same vein, you have individuals in your city and state who have made their fortune and hold their wealth in real estate investments.
What Maslow can teach you about investing in real estate?
Abraham Maslow eminent psychologist and author of the concept hierarchy of needs in his 1943 paper “A Theory of Human Motivation”, observed, that people are motivated to fulfil three basic needs before going on to other needs. The three basic human needs are food, shelter and clothing.
When you invest in real estate, you add value to your customer in an important area of human need-shelter. In fact, you are investing in an evergreen industry.
This is why, I believe you should include real estate as part of your wealth-building portfolio.
However before you begin investing in properties you need to understand these critical success factors….
Clarity is important
How you start depends on what you want to achieve:
- Are you looking at wealth accumulation within a short time frame (3-7 years)?
- Are you investing for the Long term (retirement)?
- Do you want be a Full time investor and derive all your income from your real estate investments?
You need to develop critical success traits
The next thing that is important is you develop the success traits of a real estate investor.
Five main traits are important for success:
- Competency in your niche, this means you know about the basics of real estate, at the minimum and then you are good in the real estate niche you decide to invest.
- Control over your emotions. This is important if you are going to stay in the arena for the long haul because there will always be difficulties in the real estate market. The difference between a novice and a professional is the ability to ride the eye of the tiger without getting into the belly of the tiger. Being a real estate investor takes guts and you need to have them if you want to become wealthy
- Comprehension. This means know your market cold. You understand who your customers are, what they are looking for, why they want to deal with you. If you lack these key trait-insight into your market-you are doomed to fail
- Consistency. This means you have focus and discipline to, take action daily, weekly until you accomplish your goals.
- Integrity. You stay true to your principles, because integrity is important in real estate. This means you are trustworthy, to your bankers, investors and tenants.
Strategy vs. tactics
The strategy (what to do) is more important than the tactics (how to do) of real estate investing. Let me explain.
If for instance, you wanted to gain wealth in a very short term then to buy and hold real estate, which is a long-term strategy-will not be the right strategy to achieve your goals. Flipping and wholesaling properties- buying undervalued properties and selling at a higher price to gain profit-may be the best strategy.
Knowing enough vs. Knowing it all
I think it’s important to have an understanding of real estate investing, however you don’t need to know all about real estate investing to start. You need to one thing that I think is important for an investor…You need know enough about the basics-how to analyse properties, how to get financing, and how to assemble you real estate team together. That is it.
If you wanted to make a full time career as a real estate investor, then you would have to know more. You would have to specialize in a niche.
I am not going to spend many hours learning about short sales, wholesaling and foreclosing investing especially if I am not going be a full time investor. It would be counterproductive for me, when I should spend my time doing what I am best at doing.
Let’s recap, to succeed investing in real estate…
- You need to understand why you are investing in real estate.
- You need to develop critical traits for success as a real estate investor.
- You need to choose the right tactics to match your investing objectives.
- You need to know enough about what you want achieve
This is how I have applied myself to real estate investing. Moreover, it has helped me transform my losses to wins. I have as a result enjoyed positive cash flow from my properties.
To your success.