The short-term business mindset is unequivocally responsible for some of today’s most impressive real estate deals. How else would you explain the fast-paced environment we are currently experiencing? But is it enough?
Today’s real estate investor landscape is riddled with talented, driven individuals who are more than capable of making a name for themselves. In fact, you could argue that competition has increased dramatically in a relatively short period of time. And while the number of single-family homes and condos investors flipped last year actually dropped from this time a year ago, we still saw somewhere in the neighborhood of 43,615 properties flipped by investors in the first quarter of 2017. There is no doubt about it: investing in real estate is about as popular as it has ever been. And why shouldn’t it be? According to RealtyTrac, “Homes flipped in the first quarter of 2017 were sold for a median price of $200,000, a gross flipping profit of $64,284 above the median purchase price of $135,716.”
Quite simply, today’s competition is the direct result of how profitable real estate investing can be for those that are up to the challenge. And for what it’s worth, a lot of people appear to be up to the challenge. So for you to have any hope of competing in today’s industry, you need a secret weapon; one that can separate you from the competition, and I have just the right thing: an insatiable business mindset with eyes on the future. If for nothing else, a long-term business mindset will allow investors to scale their business with growth in mind while simultaneously strengthening their foundation in the meantime.
Consequently, far too many of the investors included in the data highlighted by RealtyTrac have fallen into the short-term business mindset trap. While it’s true, many of them have realized success, it remains to be seen if it is short-lived or not. All things considered, I am of the belief that anyone can flip a single property; the real challenge arises when you transition from one property to many. However, it’s in making that jump that truly great investors are made. And therein lies the secret to today’s most prolific real estate investors: they exercise a long-term business mindset.
If you want to realize success on a level like the best investors of our generation, I highly recommend abandoning your short-term business mindset for one that emphasizes longevity. While it pays to be mindful of the present, I can assure you it’s much more valuable to a real estate investor to be mindful of the future.
I want to make it abundantly clear: I am not disparaging the idea of a short-term business mindset. As I said before, you could argue that some of today’s greatest real estate transactions are the result of an otherwise truncated approach. There is a lot to be said for a narrow focus dedicated solely to completing one specific task. I am, however, against the idea of neglecting to compliment said short-term business mindsets with a long-term counterpart. Perhaps even more specifically, I will stand by the fact that a long-time business mindset is more valuable to investors than that of a short-term one. If for nothing else, there is no reason your long-term approach can’t include short-term amendments. In avoiding exercising a long-term business mindset, you are effectively limiting your potential.
I am convinced today’s real estate investors need to look beyond that of their first year, and even their second or third. In fact, I see no reason for the mindset of a truly gifted investor to focus on anything less than five, or even 10 years. To succeed in this business, you have to learn how to scale your operations, and that will prove very difficult if you can’t see more than a year out.
Look at it this way: A short-term business mindset is more than enough to flip a single property for a profit. And while someone’s first flip will almost certainly take longer than someone who has already flipped countless properties, it’s safe to assume a single transaction will require nothing more than a short-term business mindset. In other words, you don’t need to think 10 years down the road in order to complete a deal you currently have under contract. Of course there are exceptions; rental properties, for example.
However, for the most part, all you will need to flip a single property is a short-term mindset. And there is nothing wrong with that. A single deal can net some investors more than others make in an entire year. There is absolutely a place for the short-term mindset, but I digress. While short-term approaches are well and good, the don’t hold a candle to that of the long-term business mindset.
It’s the long-term business mindset that enables investors to look beyond the deal they are currently working on, and therein lies the real value of a long-term approach. In looking past what you are currently doing at the moment, you are setting yourself up for success in the future. It’s only with a long-term mindset that you will look beyond the deal you have already and start getting things lined up for your next transaction. Short-term business mindsets, on the other hand, will have nowhere to go once their first deal is completed. Long-term mindsets, however, will already have the next deal in the pipeline waiting to go, effectively eliminating any downtime between projects.