These are the golden rules of real estate that will keep you safe and in the green…
There are a lot of ‘rules’, strategies, and philosophies thrown around the real estate world. Some of them are helpful, others can be counterproductive. Then there is this set of core golden rules. If you can only pack seven in your bag; pick these. They’ll make sure you make the right decisions, and keep you safe, and on track to where you want to go year in and year out…
1. Make Your Money When You Buy
Don’t gamble; make your money when you buy. It is often tempting to speculate, but it is unnecessary. If you want to make money from real estate, stick with this rule. This may be buying below value, buying into a steam of rental income, or having an end buyer lined up beforehand.
2. Never Stop Learning
When you stop learning you start losing. Leaders are lifelong learners. So are the best real estate investors, agents, and property managers. There is always more to learn about real estate, and trends and rules are always changing. Learn about different investment strategies, construction, property management, technology, marketing, appraisals, and mortgage lending. Make it a consistent part of your annual plan, monthly checklist, and weekly schedule.
3. Think Long
Winners don’t just think big, they think long. Anyone can get into real estate and do a few deals. Many can get in and make a million and build a small empire. Few manage to sustain and snowball that into long term wealth and billions in the bank. Be one of those by thinking long. Forget the 5 year plan. Get a 100 year plan. If you are only thinking a few years ahead you are dooming yourself to fall off a cliff after that. A 100 year plan creates massive wealth, and a real legacy.
4. It’s All About Supply and Demand
Ask billionaire real estate investor Sam Zell about the key to his success; he’ll tell you it is all about “supply and demand.” Know where the demand is, and control the supply. This may be constantly changing, but there are consistencies too. Power players like Warren Buffett and Sam Zell are famous for controlling what people demand too. If you build a good reputation and stay in the media you can influence what people want.
5. Big Picture, Laser Focus
Many real estate investors get lost because they live by the media headlines that bigger players dictate. Buffett is famous for saying never to worry about macro issues or trying to time the market. Instead he recommends honing in, and just focusing on the value of the individual investment opportunity. Not every investor has the guts to invest with a blindfold on like that. Surely there are great indicators to be found in watching trends and wider data too. So keep both a wide lens, and then zoom in to pinpoint the best picks.
6. Always Expect the Unexpected
Don’t get caught because you didn’t expect it. Expect closing costs to be more than you expected, closings to take longer, repair costs to be higher, marketing to take longer, and people to be unreliable.
7. Know You Can’t Control Everything, But That’s Okay
It definitely pays to go for controlling positions in your markets and investments. Own a controlling vote, have influence and pull, and build loyalty. Get to know your market, numbers, and real estate cycles. But also know that you can’t control everything. The good news is that you can prepare for every scenario. And if you prepare well and keep learning you can profit from the unexpected too. You can’t control the weather, but you can ensure you are the company still standing and operating in the heart of the hurricane. You can’t stop the market from rotating, but you can profit in all phases of the cycle.
Nail these golden rules above your screen and you’ll never go wrong…