We hear from hundreds of investors every week who are trying to find success in real estate investing. These are people who have taken the first steps, identified a property, and are doing everything they can to secure financing in order to make their real estate investment dreams a reality. To even get this far in the process, they have shown themselves to be motivated and entrepreneurial people striving to be successful.
But we've seen thousands of transactions in our 15+ years in the industry and can tell you with certainty that the desire to be successful is not enough. Of the people that submit an application with us, only a few end up closing on an investment property. And while those investors do well on their deals, not all of them find long-term success in real estate investing. For some, it's just a hobby or a way to earn a little extra cash. Others never completely grasp that long-term success takes a level of professionalization and management that goes beyond their hustle mindset.
In this week's 'The Hard Truths' podcast, Scott Lurie discusses what he's seen to be the biggest differentiators between those who find long-term success in investing and those who fizzle out after one or two deals. He took the time to examine our most profitable investors over the years and explores what they did that set them apart.
Hustle is necessary, but not sufficient
Before we're misinterpreted, let us be very clear. To realize your goals in real estate you need to have a burning desire to be successful. It is an absolutely essential characteristic of everyone we've ever met in the industry who has made something of themselves.
But that desire isn't all you need.
Too many people rely on their internal motivation and never gain any traction in the industry. One of the main reasons for this is that they're trying to exploit opportunities for short-term gains. They want it so bad that they aren't willing to take a long-term approach to establish themselves. Investors with this short-term mindset only are able to see what's directly in front of them and fail to understand that the legwork they put in today will pay dividends down the road. Many don't find the instantaneous success that they crave and pivot to another strategy or opportunity. Without a steadfast commitment to your vision, you are only shortchanging yourself. It takes time and discipline to build the infrastructure around you.
Continue to hustle. Keep that deep-burning motivation to be successful. But also exercise a little patience and understand that failure today doesn't mean failure forever.
Put processes in place
Success in real estate investment doesn't happen by accident. People who have made careers in the industry aren't just running and gunning on every deal they make. Typically the most profitable investors are the ones who take a measured, formulaic approach and implement processes at every level of their operation. They have a pre-determined methodology for every aspect of the investment including acquisition, financing, renovation, and disposition. If they are Buy & Hold investors or use the BRRRR method, they have processes for refinancing, tenant management, and ongoing maintenance. There is no single recipe that is guaranteed to work, but you must have some process in place that you can rely on.
The truth is, that in real estate, you are not an investor. You are a business person. You do not have the luxury to throw money at an opportunity and watch the returns roll in. You have to treat your projects as a business that requires discipline, efficiency, and repeatability. Changing your mindset will allow you to explore processes you've never considered before and will allow you to grow into an investor capable of long-term success in real estate.
Navigate troubled waters
The one thing that we never hear from our most successful investors is, "I can't." And it's not because their projects are always smooth sailing. Problems are going to present themselves throughout your real estate investing career. Some will be quick fixes while others may be a significant obstacle in your path. The ultra-successful investors that we've encountered all have an inherent belief that they can find solutions to these problems and have internalized a problem-solving mindset that helps them navigate these troubled waters.
Discipline allows them to objectively define the problem, identify a root cause, and visualize what a satisfactory end result looks like. From there, they review the resources at their disposal and work to apply one that best serves the issue at hand. While it's impossible to predetermine exactly what problems you might encounter, a well-managed operation will have considered the potential risks in their investment and will have contingency plans that can be executed to resolve any issues.
Maximize your motivation to find success in real estate investing
You've read everything you can get your hands on, you've researched your markets, you've applied for financing and now your motivation is at an all-time high. Don't let that disappear! Real estate takes time in even the fastest moving circumstances and waiting for something to happen is only doing a disservice to your future business. Leverage your hustle to begin putting processes in place that will set you up for success down the road.
Not sure how you're going to complete your repairs? Research contractors in your area and make an introduction. Unsure how you're going to exit your investment? Explore the costs of refinancing versus the price you could get on the open market.
Understanding the long-term nature of this industry and constantly working to improve your circumstances is the only way to achieve success in real estate investing. No matter where you are in your real estate journey, there is always another step to take in the right direction.