There are many different ways for a real estate investors to learn about the business. What you may not know, however, is that there are several different type of real estate education – each with their own purpose. There is the obvious way: learn as much as you can about deal structure, local markets, how to finance your deals and other specific parts of the business. And then there is actually taking what you have learned and putting it into practice. That said, there is a big difference between these two schools of thought. You can know everything about the business, but if you don’t use it properly you won’t get very far. Understanding real estate is important, but knowing how to succeed in the business is what it’s all about. Familiarize yourself with these five principles of real estate and you will find it easier to make the transition from education to practice:
1. There is no such thing as a perfect deal: Regardless of what stage of the business you are in, there is often a tendency to wait for the perfect deal to come along. While it is important to be selective in what deals you move forward on, at some point you need to take a leap of faith. Use your education to guide you. There will always be some level of risk associated with every deal. Knowing the risks should make you feel comfortable moving forward. With increased investing popularity, there will be fewer deals that will be true slam dunk, home-run deals. The longer you wait, the harder it is to take action. Understanding that deals will not be perfect is one of the hardest lessons to learn.
2. Let the data guide you: Generally speaking, real estate investors are a competitive bunch. Having the will to succeed is a necessary trait, but sometimes it can work against you. It is important to remember that you are building a business. It is easy to think that you are not going to let someone else get a property you have had your eye on for a few months, but it is easier said than done. There always has to come a point where you walk away and move on. Instead of treating it as a personal battle, use the numbers and data to help make your decisions. If the numbers don’t make sense, walk away and wait for the next one.
3. Know what you don’t know: There is no fault in not knowing something. The real estate business is full of many different numbers, locations, scenarios and formulas. You cannot be expected to be an expert in every one. If you are unsure of something, don’t be afraid to admit it. he same holds true whether you are talking to someone you just met at a meeting or a homeowner looking to sell their property. You will gain much more credibility from the people around you by saying “I don’t know, but I will find out.” There is no need to make exaggerated claims or ramble on about something you aren’t sure of. Be confident in what you know, but there is nothing wrong with saying “I don’t know” if you are unsure of something.
4. Understand how deals get done: Knowing the business is a valuable asset, but it is important to be able to apply that knowledge. Most deals are done with contacts in a respective area. You may have access to a large line of credit or have a rehab team already in place, but you need deals to put them to use. This means you need to know how to build relationships with the people around you. Simply asking for deals is probably not the best approach. You need to build these relationships over time. It may take a half dozen attempts or more before you get someone to follow up with you. Once you have established contact, you need to follow up after any deal you work on. These may sound like simple steps, but they aren’t practiced enough. If you treat the people you meet as potential business partners, your business will grow because of it.
5. Become a market leader: One of the best ways to get a leg up on your competition is by becoming a leader in the market. If you have an investing niche that you enjoy and are knowledgeable in, run with it. This could be anything from mobile home investing to tax lien auctions. By stamping yourself as an expert in this field, you may become the go-to authority in your area. You can do this by talking about it at networking events, writing articles on your blog, creating an eBook and knowing more about the topic than anyone else. It is always better to be the leader in a smaller niche than one of many in a better one.
It is not what you know, but how you use your knowledge. One of the best parts of investing in real estate is that you do not need a degree or license to get started. Knowledge of the business is important, but only good if you know how to apply it.
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