Determining What Really Creates Success in Real Estate Investment

Posted by Chris Clothier on Tue, Feb 13, 2018

realestateinvestment-passiveincome-makingadifference.jpgSometimes it can be a challenge to discern what is really going to bring your real estate investment career to the next level. What’s going to help you punch up and reach new heights for your passive income? Can you make it by way of renovations and ROI? Relying on tenant retention? Making things easier and more streamlined with the latest technology?

There are so many different paths that an investor can take if they want to improve their outcomes. One of the best parts about investing in real estate is the ability to dictate your own future. You’re at the helm. The double-edged sword is that all that choice can be paralyzing.

Knowing how to discern the best course can be tough, particularly for part-time and passive real estate investors who may not have had the time to invest in their ongoing real estate education.

Never fear—these are the top things that will make a long-term difference in your success as a real estate investor. If you stick to these guidelines, you’ll have a hard time going wrong!

Related Article: Mastering the Mindset of a Successful Real Estate Investor


The Top 5 Things That Make a Difference in Your Real Estate Investment Success

The Quality of Your Property Management

We’ve said it before and we’ll say it again: the quality of your property management team will make or break your real estate investments. As the on-the-ground team that serves your tenants and protects the longevity and overall condition of your property, you want people who not only care about the task at hand but people who get along with you and are on the same page. You want people who communicate well.

Property managers are invaluable not only for protecting your property when they cut problems off at the pass, but they help ensure tenant retention and guard against bad tenants: two things that maximize your cash flow.

Poor management can ruin the best investment opportunities while great managers can elevate mediocre ones. This is an area where you don’t want to cut any corners.

Scaling Your Investments Over Time

Naturally, a real estate investor will want to grow their portfolio over time. You can’t stick with one property forever and expect great success. Scaling can be an intimidating prospect when you start doing it—it usually means taking on more mortgages and spending more money. But there’s something incredibly exciting about creating more streams of income, too. And that—creating multiple streams of income—is the key to building wealth in real estate investment.

Without it, you won’t get anywhere. You should be building towards scaling and acquiring another investment property. You should plan to acquire many! Be looking for investment opportunities everywhere.

Calculated, Informed Decisions

For the real estate investor, every decision must be calculated. While instincts and gut feelings can play a role in decision-making, they always play second fiddle to hard facts. One of the biggest mistakes investors make is going into opportunities blind. That goes for everything, not just buying properties. It means renovating without researching what tenants really value in your particular market. It means locking yourself into a bad financing deal. It can even be simple as being disorganized!

For the real estate investor, everything must be done with purpose and intentionality. Be calculated and go in with the facts. The more prepared you are, the more clear-headed you’ll be when it’s time to make a decision.

Guarding Against Risk (Due Diligence)

Due diligence is a key concept for real estate investors to master. It’s the idea of being on top of the ball, managing your risk, and leaving no stone unturned. Leaning on numbers is part of that due diligence. For every investor making the decision to purchase an investment property, you must run the numbers and see if they check out to yield positive cash flow. And that’s only part of your due diligence. It involves home inspections, investigating the neighborhood, market analysis, and getting second and third opinions from qualified experts.

Cover all of your bases, then cover them again.

Key Markets

Lastly, real estate investors must zero in on key markets if they wish to maximize their success. This doesn’t necessarily mean the hottest markets around. It means markets that are going to provide stable, consistent, long-term yields. For buy-and-hold investments, you have to think long-term. So you want markets that have a history of long-term stability and consistent returns.

You want markets with a diverse economy, a growing population, and steady growth in the real estate sector. These key “bread and butter” markets will be ideal for building and supporting the bulk of your portfolio.

With these five principles in mind, real estate investors can better navigate real estate investment with the assurance that they’re on the right path to success. And remember—you don’t have to chart your course alone.

It’s so much easier to invest in real estate when you have someone by your side who has done it all before—and succeeded. Let Memphis Invest help you find success in real estate investment today!

Part of success in real estate investment is knowing mistakes to avoid. Don't let these classic blunders stand in your way!

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Topics: investment property, real estate investment, risk management