How to Think Like a Real Estate Investor

April 10th, 2024

Real estate investors come in all shapes and sizes. They invest in residential homes, commercial properties, rental units, and fix-and-flip projects at all different investment levels. If you were asked to pick investors out of a lineup based on superficial looks alone, you wouldn’t be able to do it. But behind all of these differences are some core characteristics that define what it means to be a real estate investor. They see the world differently. They look for opportunities where none seem obvious. Most importantly, they have an inherent hustle mentality that ensures they will be the hardest worker in any room and their competitive drive gets them out of bed in the morning.

The Hard Money Co. has seen these characteristics over and over again from some of our most successful investing partners. If you already exhibit these traits, you’ll read along and know that you have what it takes to be successful in this industry. If not, you’ll know what you need to work on to have a chance.

 

Strategic Vision

The foremost defining characteristic of our most successful borrowers is that they are all strategic thinkers. They perceive the world, and more importantly, the real estate market, in such a way that they are always thinking 2-3 moves ahead. When presented with the opportunity to buy a distressed asset, they can envision the path through acquisition, renovation, and resale with clarity and conviction. However, being strategic thinkers doesn’t mean they all follow the same strategy. Some are flippers, others utilize the BRRRR strategy to build a growing, cash-flowing portfolio, and yet others are more opportunistic in their investment choices.

Regardless of their strategy, they all understand in advance the path they need to take to succeed. Conversely, those who apply but fail to close a deal with The Hard Money Co. often recognize an opportunity but lack a clear plan. They initiate the process by submitting an application—a commendable first step. Yet, when our team reaches out to discuss the deal, they lack the strategic foresight to detail their plans for the property, their collaborators, their exit strategy, or their expected financial return.

Submitting an application will certainly start a conversation with us. However, your chances of success increase significantly if you have a well-defined vision for success.

 

Think in Dollars

Realistically, this principle should be at the forefront. Motivation by financial gain is a common thread among us, yet those who excel in real estate investment constantly operate with a financial mindset. The duration of a project isn’t quantified in months, weeks, or days, but in interest costs. Upon evaluating a distressed asset, they don’t fixate on a missing roof, a crumbling foundation, or an outdated bathroom; instead, they calculate the expenses involved and the total value these repairs will add to the property when it’s time to sell.

Adopting a dollar-centric approach enhances your understanding of where to direct your efforts to maximize your profit. It also serves as a motivation, especially when personal life demands attention. Procrastination can be costly; what seems like a task for ‘next week’ can accrue an additional $600 in interest, making immediate action crucial.

Developing this financial acumen comes with experience and practice. But once it becomes second nature, it transforms your perspective on investments and the identification of opportunities.

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