There are many things you can and should do before becoming a real estate investor. Official schooling is not required, but becoming more knowledgeable about real estate is crucial to your success. Here are the 9 prerequisites to becoming a real estate investor.
Becoming a successful real estate investor includes learning the skills necessary, understanding your market, and having the tenacity to push through the obstacles that will inevitably arise. The market fluctuates, and it changes depending on a variety of factors. Knowing about the trends will help you know when you should or should not invest.
1. Make an Investment in Learning and Tools
There is a lot to learn and understand about real estate if you want to be successful and make good investments. Being willing and to invest time and money into personal learning and helpful tools can make a big impact on your progress as you pursue your goal.
Learning takes time, so setting apart time on your weekends, in the evenings, or whenever you are free to sit down and study more about real estate investing will be worthwhile. Take time to look up YouTube videos, read articles, look at local real estate laws, go look at listings in your area, learn what people like and dislike about real estate, and become more acquainted with the real estate world. You will start gaining more and more knowledge and it will benefit you when you start applying your education and begin investing.
Another option is to find a system or a mentoring program. While they can be pricey, it can slice years off your learning curve and get you on the correct path right away.
2. Have Tenacity
A strong prerequisite to have for real estate investing is to have the tenacity to follow through to the end. Have the determination, the passion, the perseverance, and the persistence to stick with your goal and complete it. It is hard to invest money, especially because there are no guarantees that you will make the money back. Investing is risky, but if you stay strong throughout your whole project, then you can reap major benefits.
With real estate investing, give yourself goals to hit. If you are just learning about investing, make goals to study real estate investing for a set amount of time each week. Then, as you hit those short-term goals, you can extend them. Maybe you want to start with studying 3 hours a week. The next week, you can make it 4 hours, and the next week 5 hours. The week after you might want to start studying each evening and make it a consecutive habit. Soon, those short goals will help you gain knowledge and good self-confidence in yourself.
Being able to hit small goals makes you feel successful after each goal you hit. This builds your confidence in yourself and when you gain confidence, you can learn better, grow more, and be more successful.
3. Take Responsibility
The best real estate investors take accountability for their actions and don’t blame other people. As stated above, investing money is hard and scary. There are a lot of risks, but there can be a lot of success, which is why people do it. A lesson you should learn before becoming a real estate investor is that all of the good and all of the bad are on you. These are your decisions and your money and you have to be willing to accept the drawbacks that come along with the success.
Because of that, learning to take responsibility for your actions is very important to your success.
Once you take responsibility, you will learn a couple of valuable lessons. First, you make all of the decisions, so it can only be your fault if something goes right or wrong. Second, nothing will get done if you don’t do it. If you don’t work hard, no one will tell you to get going and work harder. So, getting things done is up to you and you have to be self-disciplined enough to make yourself reach your goals.
4. Put a Blueprint Together
A successful blueprint requires reverse engineering your success. Put where you want to be as the end goal, then plan all the steps on how to get there. For example, if you want to get from A to H, you have to hit steps B, C, D, E, F, and G. Then, you arrive at your goal successfully.
In a real estate example, to go from being yourself to now becoming a real estate investor there are steps. Just like all of the prerequisites written about in this article and the video above, you have to study, learn, dedicate time, invest money, learn about successful mindsets, and more. Learning as much as you can helps you become smarter with your money and you can determine where and when you want to invest it.
So, make a goal. Figure out what a realistic investing goal for you is, and be sure that you know your limitations. If you set a goal that’s too hard to achieve, all you will do is upset yourself and lose money and motivation when you can’t hit it. But, if you make a good goal that you know you can hit with hard work, then all you have to do is plan it out. Look at where you are now, and figure out the steps that get you from here to there.
As you start your work in achieving your goal, be aware that there might be more steps to get to your goal as you learn more. Some of the steps might take longer or shorter than you thought, but being flexible with the steps of your plan changing will help you out. Then when plans change and you have to adjust, your plan adjustments will be easier because you anticipated that change would happen.
5. Give Yourself Time
Investing your time into learning about how investing works, how the stock market works, how the local economy is, what the local laws are, and much more helps you grow from a basic real estate investor into a professional who knows a lot about the market. Being able to spend 10-15 hours a week dedicated to learning more about real estate investing and acting upon that knowledge will be one of the most helpful tools in your success.
The best investors are people who dedicate their days to working, researching, and learning about the state of the local market. Are many people looking to buy? Are families looking to rent? What homes offer the most square footage? What homes have the best functioning floor plans for potential clients? Are there new homes being built in the area? Are there homes for sale in good neighborhoods? What are the schools in the area like? How close are the homes to stores and shopping centers? What is the value of the location? Is the housing market going up or down?
There are many questions you can ask to figure out more about the area you are looking to invest in. Knowing what the area has to offer, what people are looking for in the area, and what the market is like all help you stay informed and helps you make better investing decisions.
A good rule to live by in the real estate investing industry is that the more you know, the better. By investing your time into understanding more and asking more questions, you will learn so much and it will prepare you for investing.
6. Don’t Be a Victim
There are a lot of highs and lows that can come with being a real estate investor. If you are buying and selling property, you might find that your deals get beat out by other people. Taking those losses personally can quickly turn your work into madness.
If someone goes with a better offer put in on a house, you can be disappointed that you didn’t get the deal, but if you take it personally then you can start to see your progress slow down due to frustration and anger. Taking ownership of your actions can help you see where you could’ve improved and what you could’ve done better, then move on and learn from it.
Then, the next time you put in an offer on a property, you can use the knowledge you gained and apply it. You can become a step closer to getting a deal you want and that you will be happy with.
7. Follow Others’ Guidance
Other people have invested in real estate and have been successful, others have failed, and learning about both of those experiences will help you learn and grow. Watch, observe and learn from those who have been doing this for a while. Go online, learn the tips and tricks of the industry, and ask professionals questions with the intent of learning from them.
Learning how different techniques help different people with real estate investing can help you learn the tips that will work for you. Everyone is different and everyone has different amounts of money for investing, so there may be tips that work better for beginners, people who have been investing for a few years, and people who have been investing for 30 years. Learn what made other people successful, and apply the methods that work best for you and your situation.
Learning from others can also help you avoid mistakes. Knowing that by making decision “A” gets you result “B” may help you out. Then, you start to understand that certain decisions have certain outcomes. Some outcomes are good, some are bad. Learn about as much as you can so that you can try your best to avoid bad outcomes and achieve good outcomes.
8. Understand the Stock and Housing Market
Real estate revolves around the housing market and the economy. The economy fluctuates depending on how well, bad, or steady the stock market is. So, knowing about the local or potential housing market and knowing about the stock market can keep you well informed and ready for making investment decisions.
If you are going to invest in property in your local area, then you have a good start already because you understand the area pretty well. You already have a base knowledge of the good and bad neighborhoods, the local economy, the new properties, the schools, the convenience of location, and the laws in the area. All you need to do now is dive deeper and learn more specifics. You probably understand your area with a shallow general level of knowledge, so now you need to expand it by getting deeper and more specific.
If you do not know much about the stock market, all you need to understand from a real estate investment standpoint is how the market works, and how to read the charts and understand the trends. If you can connect how laws or other political operations affect the stock market, you can begin to follow and predict trends.
Being able to predict approximately when the market will go up or down will help you avoid losses when buying and selling property. This helps you avoid losses and gain profits.
9. Active or Passive Investing?
There are two main types of investment strategies: active and passive investing. Active investing is fixing and flipping, finding and managing properties, wholesaling to other investors, or working as a licensed real estate agent. This can be seen as when people buy a home at a low cost, then they invest more of their money in fixing it up, then they sell for a higher amount. It requires more hard work, and normally it is the full-time job of a person, not a side job.
Passive real estate investing is better for people wanting to invest as a side job. This can be seen as buying properties for long-term cash flow like renting. People prefer this because they do not have to deal with it every day. Any issues with a rental house can be handled with a property manager and your approvals, and they can keep their jobs while having money from a rental home flow in on the side.
Depending on your interest, your amount of money, and your personal preference, you can decide for yourself what kind of real estate investing works best for you. Then, you can do more research on that specific type of investing and you can learn more about specifically what applies to you rather than learning about investing generally.