If you want to start investing in real estate, I highly recommend taking your education seriously. If for nothing else, it’s what you know that will shape how your career unfolds. And, as it turns out, not all of which you know is created equal. There are valuable bits of information that can help immensely at the onset of your investing business. Just know this: What you take into your first deal will dramatically impact how you proceed, so pack accordingly.
Today’s most gifted real estate investors are the culmination of years of experience, not the least of which took place before they even started investing. In other words, what you know before you even invest in your first deal or even set up an LLC is critical to your success as an investor. You would be wise to remember that your real estate education has already started — even if you aren’t investing yet.
Fortunately, you no longer have to live or die by trial and error. It’s entirely possible to learn how to start investing in real estate correctly from the beginning, without making too many mistakes. If you want to give yourself the best odds of doing so, familiarize yourself with the following things I wish I knew before I started.
If you want to start investing in real estate, there are plenty of things you should know. Real estate investing is as broad of an industry as there is, and savvy investors must familiarize themselves with everything from economics and marketing to construction and sales, but I digress. Understanding the real estate industry isn’t a sprint; it’s a marathon. Instead of weighing you down with technicalities, it’s better to start you off with the basics; everything else will come with experience. Until then, there are tenets that I believe carry more weight for new investors, and I certainly wish I knew them when I first started out.
Let’s take a look at what I believe to be three of the most valuable lessons I learned while investing in real estate, and how they can help new investors from the minute they decide to get into the industry:
1. Mistakes Aren’t The End Of Your Career
There’s no doubt about it; your success or failure in this industry is directly correlated to your very own mindset. How you perceive what’s ahead of you, and even behind you, will go a long way in shaping who you are, and mistakes are no exception. In fact, I could argue that the way you handle mistakes can either make or break your career as a real estate investor. If for nothing else, it’s those that can learn from their mistakes that stand the best chances of moving forward. Consequently, it’s those that neglect to learn from their mistakes that are destined to repeat them.
I want to make it abundantly clear: everyone makes mistakes. Even today’s best investors don’t have a spotless track record. There are simply too many variables in the world of real estate investing to avoid making any mistakes at all. It is worth noting, however, that mistakes aren’t the end of your career, despite how costly they may be. Of course, nobody wants to come out on the wrong end of a mistake, but I can argue that the lessons learned from some mistakes are invaluable, and sometimes even worth the inconvenience.
Those that can learn from the mistakes they make are much less likely to repeat them, essentially mitigating risk. For instance, if you forget to account for closing costs on your first deal, I am willing to bet you never forget about them again. And while it may have been costly in the moment, you will find the next go-around a little easier. As long as you are willing to own up to what you did wrong and adjust your next strategy accordingly, there is no reason your next mistake can’t be a valuable learning experience.
2. Your Network Is Your Most Valuable Asset
I have said it before, and I’ll say it again: real estate is a people business. Few assets are more valuable to today’s real estate investors than those in their own network. At the very least, it’s the people you align yourself with that can simultaneously help you find deals, funding, advice, and a whole slew of invaluable things. Remember, who you know in this industry is just as valuable as what you know — if not more so. With the right connections, there’s no reason you couldn’t expect your career to be propelled to a hire level. Savvy investors know it, and it’s time new investors did, too: your network is your most valuable asset.
The sooner you realize the value in a trustworthy network, the better, as everyone you run into may serve as a valuable contributor at one point or another. And therein lies the key to networking early: Not unlike your 401(k), early contributions to your network will grow your potential exponentially. A valuable contact early in your career could offer just the foundation you need to get started off on the right foot. There’s no reason their assistance couldn’t point your business in the right direction and help it maintain momentum. That said, the sooner you find like-minded people to work with, the more likely your business is to benefit over the course of your career.
As a new investor, I highly recommend treating every contact like the valuable asset they could potentially turn into. You never know who will be your next partner, or even where your next deal will come from, so keep your ear to the ground and an open mind about yourself. That way, when the opportunity arises, you could find yourself with another valuable asset.
3. There’s A System For Everything
As a new investor, time isn’t just money; it’s everything. Perhaps even more importantly, time is the one asset you can never get back, so you need to do everything in your power to make every second count. Whether it’s in finding a deal, initiating a marketing campaign or simply going on vacation, time is always of the essence. We all want and need more of it, but not all of us are guaranteed it. That said, it’s in your best interest to do what you can to see to it that you are efficient with time you are given; only then will you find yourself with the time you really need to become a successful investor.
Realizing success as an investor has less to do with working more hours and more to do with maximizing the hours you spend actually working. In fact, I maintain that today’s most prolific investors are the direct result of working smarter, not harder. And for what it’s worth, there is no better way to work smarter than to initiate proven systems — those that have proven capable of replicating successful outcomes. They are out there; you just need to find them and use them yourself. What’s more, I have yet yo come across a task that can’t be systemized. It stands to reason that there is literally a system for everything. That means it is entirely possible for your current business model to become more efficient in every task, regardless of the size or scale.
In systemizing your business, you are essentially creating a repeatable process that can result in a predictable outcome. It’s a blueprint — if you will — for how to carry out a job, and there is no reason it can translate to everything real estate investors do. Buying homes, selling properties, initiating marketing campaigns and even buying office supplies are all tasks that can be systemized. And in doing so, you remove the process of trial and error, essentially making your efforts more efficient and predictable.
It helps to understand the concept of systemization early, as it’ll help you grow and scale your business with ease. Systemize the strategy you use to acquire homes by creating a step-by-step checklist. That way you will know what to do the next time around. Then, do the same for everything else. At some point, you will be able to remove yourself from the equation and still realize an inherent level of success — all thanks to the systems put in place.
In The End
In a perfect world, new investors would already know everything they need to know before they start investing in real estate. However, the world is far from perfect, and real estate isn’t the exception. Chances are, new real estate investors will have an idea of what they are getting into, but it’s inevitable that their lack of experience will witness their proficiency on subject matter fall just a little short. Nobody will become a real estate investor and immediately understand everything the industry can throw at them. That said, there are valuable concepts to take into your first day as an investor; ideas that will make the rest of your career that much easier.