What does it take to be a successful property investor?

This is an interesting question and one which you will no doubt have asked yourself when initially thinking of entering the property investment market. There are a number of factors prevalent in successful property investors although no two investors are ever the same. So, let us take a look at some of the factors to take into consideration.

Do you need a love of money?

As the ultimate goal in property investment is to make money, money has to play a role in your endgame. However, you may also have other goals such as building a retirement fund, looking after your family or simply maximising your investment skills. It is also worth noting that you need to be prepared to lose money to make money in the long term. There is no investor in the world that has made a profit on every investment…….even if some may have you believe otherwise. Remember, a lot of the world’s billionaires today experienced significant financial distress in their early years and some have even experienced bankruptcy!

Focus and resilience

The idea that you can somehow make a fortune in the property market overnight is simply wrong. You can plant the seeds for a very lucrative career in property investment but this may take years to come to fruition. While there is nothing wrong in taking a short term profit if it presents itself, focus on the longer term will separate the moderately successful property investors of the future from the extremely successful property investors.

Hard work and knowledge

There is a saying, the harder you work the luckier you become, which just about says everything. Hard work and a deep-seated knowledge of your investment markets will ensure that when the time is right you know the assets to buy. Just because you are not investing on a regular basis does not mean you have not done due diligence and research. In many ways, it is those who are willing to hold back until the right investment presents itself that are the potential success stories of tomorrow. Also, while property courses will help to expand your knowledge, there is no shortcut to success in any investment market.

Avoid procrastination

They say that “procrastination is the thief of time” and this is perfectly true. If you waste time reviewing potential investments over and over again, and are unable to make a decision, does this not tell you something? Unless an investment feels right, it is often very difficult to justify investing your hard earned funds. Set your goals, set your criteria and while there should be a little variance, do not sell yourself short on your long-term strategy. If it doesn’t feel right, bin it!

Discipline

Discipline is a very important personality trait whether you are buying stocks and shares, property or antiques. The moment that you let emotions get in the way of your investment decisions, whether buying or selling, is the moment that your career could be taking a huge about turn. When you are considering a property investment, work out the maximum price at which you can still make money and stick to your investment strategy. Bizarrely, and many people will appreciate this when they think about it, it is often more difficult to take a loss than it is a profit.

We have seen many property investors who have “sold too soon” while others have hung onto “dead investments” unwilling or unable to sell, take a loss and admit they were wrong. There is a big difference between having confidence in your investment skills and letting your ego run riot. Discipline, discipline, discipline……

If it looks too good to be true….

If you decide to pursue a long-term career in property investment you will at some point come across deals which look “too good to be true”. Very often investors, especially those with limited experience, are blinded by the “value” and in some cases fail to carry out simple due diligence. Before you begin your investment career you should put together an investment plan you can follow which details stage by stage actions. From spotting a potential investment all the way through to closing the deal, there are many different actions to take. If you have a plan/checklist this allows you more time to focus on the pros and cons of the investment and how you might be able to make a return.

Action lists may sound boring but they require no brainpower and ensure that nothing is missed, especially if you are offered a deal which looks too good to be true.

Due diligence is an extensive process and investigation that should be undertaken before buying any asset. Whether you’re conducting research yourself or using a property investment company to help you. Property company RWinvest suggests taking a visit to the property or development site, looking at the surrounding area, and making sure you consider tenant demand if you’re investing in a buy to let. 

Work smart not hard

Many people measure the amount of work they do by the hours they put in. Aside from the fact that the human brain begins to lose focus with stints of more than two hours and maybe even one hour, you need to work smart not hard. Focus your time, money and effort on achievable goals while also ensuring that you keep up-to-date with the latest developments in the sector. Ultimately your success will not be measured in the hours spent looking for the next deal but how successful your last deal was.

Keep your focus; only consider opportunities where you have a real interest together with the skills and knowledge to make it work.

Prepare for the unexpected

The idea of preparing for the expected is in itself a conflicting statement, how can you prepare for something you’re not aware of? Simple, when looking at investments, development costs and rental income ensure that you give yourself some “headroom” in the event of additional costs going forward. This may be something as simple as replacement of a boiler, a one-month period where there is no tenant in your property or even eviction costs for a troublesome tenant. If you are able to create yourself a fund to fund the unexpected, this will not impact your overall cash flow forecasts and not impact your ability to invest going forward.

Remember, if you run short of cash and are forced to sell your property, how many forced sellers do you know who get the best/real price for their assets?

Summary

These factors should give you a flavour of what to expect if you are considering a long-term career in property investment. Leave your ego and emotions at the door, focus on your skills and experience and above all, trust yourself. Work smart, not hard, and try not to relate the hours that you put in everyday to your long-term success. Yes, those who work hardest tend to be the luckiest but only to a certain extent. Try it the next time, split your working day into 90 minute periods with a 30 minute rest in between. You will notice that during your working phase you are more focused and during your rest phase you can actually take a breather. One final piece of advice, if you run your winners and cut your losers…..you won’t go too far wrong.

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