Land is said to have made a larger number of Millionaires than anything else. For the individuals who have effectively profited in it, it’s not hard to perceive any reason why. With such a significant number of various approaches to develop riches putting resources into land, there are huge amounts of chances for a wide range of individuals with various ranges of abilities and gifts to be effective, profit, and improve their monetary position in important ways.
There is not a viable replacement for learning. When you see the absolute best doing what they do, they generally appear to know more than everyone around them. Land financial specialists with huge portfolio essentially find out about what drives markets, how to time market cycles, and which things to watch out for. They are considerably more liable to perceive moving markets before others do and are set up to exploit these open doors when they present themselves.
If you want to focus on where to grow your knowledge, I recommend starting with developing the following skills:
- The ability to analyze a property for cash flow
- The ability to recognize an under-valued property
- Developing a basic understanding for estimating rehab costs
- Learning the economic factors that drive a market
- Learning the various pieces at play when it comes to owning rental property (property management duties, etc)
The more you think about land contributing, the less dread you’ll have. Conquering trepidation is a standout amongst the best things you can figure out how to would in the event that you like to cut out a fruitful profession for yourself in land.
Having tolerance may sound straightforward, however that is not generally the situation. With regards to land contributing, there is a great deal of weight on you to move and move quick. The best arrangements go fast, and enabling ventures to keep running past the settled upon course of events can be costly. Speculators are continually confronting weights to accomplish more, do it quicker, and do it less expensive.
The best financial specialists have figured out how to temper this weight with astuteness and tolerance. They know when they have to run quick, and when they have to stop and hang tight to perceive how things create. Persistence can take a few structures with regards to land contributing. Figuring out how to perceive regions where you’ll have to rehearse it can spare you from a great deal of costly missteps.
One major region financial specialists commit errors on is purchasing a property exclusively on the grounds that it enables them to meet an objective they’ve built up as far as they could tell. Numerous amateur speculators set due dates for when they’d like to purchase their next property, at that point feel strain to get it going regardless of whether the arrangement isn’t that extraordinary. The best financial specialists don’t want to purchase a pre-decided number of houses a month. They know whether they don’t get one this month, they may simply purchase two one month from now. Having persistence to sit tight for the correct arrangement is vital, and having the courage to hold up until it goes along is a significant attribute to have.
Another issue fledgling speculators make is hopping in at the wrong piece of the market cycle. At the point when every other person is purchasing a home, it tends to entice need to get included yourself. Top speculators zig when every other person zooms. They are frightful when others are covetous and insatiable when others are dreadful. Trusting that the market will back off, or crash even, can require progressively intestinal guts yet it is additionally a vastly improved time to get resources.
Dealing with the erosion between strain to act and tolerance to hold up is an intense aptitude to create. The best land speculators have aced this and receive its benefits.
While real estate investing may look like it’s all about the numbers from the outside, this is rarely the case. While buying cash flowing property and holding onto it for a long period of time will generally build your wealth, the very best investors do more than just buy and hold. They buy and improve the assets in their portfolio, adding value in additional ways.
Having the vision to see what a property could be, and then pursuing that vision, is what sets apart the average investors from the best. In real estate there is a term called “highest and best use.” It describes the concept of finding the very best use for a property and working to help bring that to fruition. Good investors do this well.
In a hot market, you don’t just find good deals. You make good deals. Top notch investors see ways to add value to properties without spending more money than they have to. For those with the vision to bring it about, there can be big rewards for those who buy the ugly duckling and turn it into the beautiful swan.
Some of the common ways investors do this are:
- Adding bedrooms to a house in a house with less than three
- Adding bathrooms to a house with less than two
- Adding square footage cheaply. Often by converting car ports, Florida rooms, efficiency rooms, or covered storage areas to make them part of the property
- Buying properties with strong bones that need cheap cosmetic upgrades
- Buying income property and increasing the rents
- Buying commercial property and decreasing the expenses
There are many ways to add value to a property and the best real estate investors have mastered this. Whether it’s a big time real estate developer who creates an experience buyers will pay top dollar for, or a weekend warrior handyman who buys a fixer upper and does the work himself, the top notch investors all have the vision to take something as it lies and make it better.
Efficiency is a skill practiced by the best business people around, and real estate investing is no exception. The vast majority of us would accomplish much more than we do in life if we had the ability to cut through distractions and get things done faster. Top real estate investors excel in this area.
In order to become efficient at what they do, smart business people look for things that take up time throughout their day that aren’t adding to the bottom line. Answering every email, taking unscheduled phone calls, and following up on tasks that are someone else’s responsibility are all examples of ways we prevent ourselves from focusing on what really matters.
Once you understand how important it is to be efficient, you are more likely to start demanding it from those around you. Contractors are much less likely to miss their timelines when they know the boss is an efficient person who expects the same. This principle drips its way down through every aspect of the business.
The best investors expect information to be delivered timely and in the format they understand best. They use their time wisely, listening to audio books and podcasts during their morning commute and leveraging assistants to respond to emails and phone calls. If you want to take your business to the next level, start with increasing your own efficiency and see if it doesn’t have a direct result on your productivity.
This one should come as no surprise. The best investors are highly focused, know what they want, and do not let anything prevent them from getting there. Obstacles are not a problem for the focused. A light bulb shines it’s light throughout a whole room. Its energy is spread out and covers a large area-that is its purpose. A laser, however, is highly focused. Its energy is narrowly concentrated in a specific direction. Lasers can punch though obstacles that light bulbs cannot.
The best investors have the focus of a laser. They don’t let obstacles stop them, and they know exactly where they are going. The “Pareto Principle” (also called the 80/20 rule and developed by Italian economist Vilfredo Pareto) can be summed up by stating 20% of your efforts will result in 80% of your results. Top business people adhere to this belief and it’s philosophy is seen in their business plans. By focusing their efforts on the 20% of the job that produces 80% of the results, they outperform their competition and make progress where others stall.
Don’t believe me? Look at the way income is distributed throughout the world. Look at the way the top 20% in most industries get 80% of the business. Whether it’s at a macro level (20% of a nations population control 80% of the wealth), business level (top 20% of salespeople are responsible for 80% of the revenue generated), or personal level (you wear 20% of your closet’s clothes 80% of the time), you’ll see the 80/20 principle at work.
Top investors understand this and narrow their focus to concentrate it rather than expand it to weaken it. The ability to focus increases production and allows them to punch through obstacles that would stop others.
6. Relationship building
If you want to know what the best business people focus on in their top 20%, it’s relationship building. Those with the best relationships always seem to win. Whether it’s getting the deal first, getting their permits approved by the city, winning the bid for the project, or getting the best pricing for the construction, those who have the best relationships are going to succeed.
We’ve all heard “it’s not what you know, it’s who you know”. The top investors have stopped fighting this fact and embraced it. Want to know why the wealthiest business people want yachts, expensive huge homes, and take lavish trips? It’s not always purely ego. These people understand that assets like these can open doors for relationship building that pay off bigger later.
That yacht can be a great way to get to know someone to give you the business loan your company needs, and that vacation home in the mountains can come in really useful when trying to build a relationship with someone who ski’s. Owning assets isn’t the only way to improve your relationship building, but it is an indication that smart business men and women understand this.
Bringing value to others is the foundational bedrock of relationship building. Learning it’s not always about you and taking steps of faith to pour into someone else first can open big doors for you later. Books like “How To Win Friends And Influence People” are timeless classics because they lay out the fundamentals for relationship building. Many of the top real estate investors I’ve met read this book over and over again every year!
The last trait I’ve noticed that is common amongst successful real estate investors is their ability to use leverage. If you want to do anything at a large scale level, learning to learn leverage is absolutely crucial.
Leverage can come in several forms, but the three I see most commonly mastered by the top investors are money, people, and opportunity.
OPM, or “Other People’s Money” is one of the most commonly taught tenants of successful real estate investing. At a certain point in every successful investors career, they end up with more deals and more opportunity than they have capital to buy. At this point, the ability to use other people’s money (and pay them for it) is the best way to scale. By leveraging the resources of others, top investors grow their wealth and the size of their portfolio while creating win-win scenarios for those partnering with them through financial backing. If you aspire to be a successful real estate investor, you’d be wise to assume at some point you’ll be needing OPM.
Succesfsul investors also leverage people. By hiring talented, hard working trustworthy people (or partnering with them), top tier investors get much more done than they ever could by themselves. In any project, job, or business, there is a specific number of tasks that need to be completed to move forward. One of the biggest mistakes of the amateur is to assume they must be the one to complete all these tasks. Successful business people have learned to leverage the talents and abilities of other people to allow them to focus more on the 20% of the business that will bring them more results. If you plan to be a top notch investor, start learning as much as you can about how to hire talented people to work for you.
The final thing I notice the best investors leverage is opportunity. Successful business people learn that every win isn’t just a win, it’s an opportunity for another win down the road. When a project is completed and the investors in the deal are happy, it is much easier to leverage that success into getting their capital again in your next deal. When you develop and sell land in an area with high demand, it is much easier to learn from that experience and do it better the second time around. One successful endeavor almost always leads to more opportunity to repeat it, and the best investors are always looking to capitalize on this fact. The best don’t waste opportunities to do even better the next time.
Consider the Golden State Warriors, considered to be one of the very best basketball teams ever assembled in the history of the NBA. After winning the league championship, they were able to recruit Kevin Durant, considered to be a candidate for best player in the league. How did the Warriors accomplish this? Their winning formula created an attractive environment that enticed top talent to join them, making it even easier to win another Championship the next year (they went on to win two more in a row). How does this play out in real estate investing?
- Buying more deals creates stronger relationships with those who find deals. The top investors get these deals first.
- Doing more rehabs helps investors learn new, creative ways to save money on rehabs in the future.
- Learning to rehab rentals can lead to opportunities to also flip houses. The skill sets between the two have a large overlap.
- Learning how to read a profit and loss statement and manage employees can create opportunities to start newer side businesses.
- Owning a large portfolio of rental properties can create opportunity to open your own property management company and scale up.
- Flipping large numbers of homes can create an opportunity to build a real estate brokerage to sell them, save on commissions, and scale up.
When it comes to real estate investing, very little is new or innovative. The vast majority of the best investors are simply learning from what others are doing and then putting it into practice better than their competition does. If you want to be the best yourself, start studying what they do, how they act, and the way they think. If you do what the best do, someday you’ll become the best yourself!