7 Habits of Highly Successful Real Estate Investor

Becoming a highly successful real estate investor isn’t just about making a few smart decisions. It’s about cultivating consistent habits that lead to long-term success. The most successful investors remain resilient amidst ups and downs, through strategies and behaviors inculcated with regard to dealing with unpredictable challenges. They understand that lasting wealth in real estate is created over time. This includes consistent discipline, proper planning, and continuous education. 

In this article, we’ll assess the seven habits that define a successful real estate investor and discuss how you can plug those habits into your routine to achieve your financial goals.

Habit 1: They Never Stop Learning

An important factor that separates the successful real estate investor from the average is education. They are never satisfied with the level of knowledge they already have. They are always seeking ways of learning more about the market and the business in general.

An investor needs to be on their toes in order to monitor the market trends continually. Their attention is directed towards various data on the housing market, economic news, and regulatory changes.

The digital age has also brought technology to real estate investing. Successful investors have embraced these resources to their advantage in order to further knowledge in the real estate market. They utilize online tools and apps to analyze market data, track property performance, and communicate with potential buyers and sellers.

Habit 2: They Manage Their Finances Wisely

Successful real estate investors understand the importance of financial discipline. They manage their finances well so that the investments they make turn out to be lucrative, sustainable, and profitable. Top investors know how to develop and stick to a budget. Carefully, they track their income and expenses to make sure positive cash flow occurs.

Leverage can be an excellent tool for real estate investors. Of course, this involves using leverage strategically. Successful real estate investing involves carefully screening loan options and credit terms which can be utilized in order to magnify investments without over-leveraging portfolios. There is also a set of unexpected expenses that may arise in real estate investments, such as repairs, vacancy, or an economic downturn. Successful investors prepare on those through cash reserves set aside in advance, should something go wrong.

Grant Cardone has long preached cash flow and conservative leverage. He advises to use OPM (other people's money) to grow your portfolio, but to always be very careful with the terms offered and to have adequate liquidity available for those unexpected surprises. His disciplined approach to finances has enabled him to build a billion-dollar real estate portfolio.

Habit 3: They Build Strong Networks

Successful investors in real estate understand how networking adds a magical touch to investment. With connections in the industry, one can access more opportunities, insight, and knowledge. Top investors are proactive in building their networks. Attending industry events or conferences affords them the opportunity to connect with other investors, agents, contractors, and financial experts.

Similarly, real estate investors can have an added advantage from learning from active and experienced mentors. These mentors are able to guide investors and share their valuable expertise and advice.

Joe Fairless is a real estate investor and founder of Ashcroft Capital. According to him, his network has been the leading source for much of his success. He reached out early in life and learned from experienced professionals and mentors who helped him around the challenging corners within an otherwise vague industry. As he continued with real estate events and mastermind groups, he was able to raise millions of capital, strategic partnerships, and grow his company into a 2 billion-dollar real estate portfolio.

Habit 4: They Do Their Homework

Successful real estate investors are always into good research. They invest in due diligence regarding any investment decision so that every investment they make would always be safe and worth the cost.

Successful investors have done extensive market research even before investing. Real estate investments should maintain compliance with local zoning laws and property code regulations, as well as the government's tax policies. Successful investors have researched with care and have understood the legal and regulatory framework that applies to their respective investments. This entails that these properties are in compliance with each of the various restrictive laws and regulations to avoid legal implications, or worse, financial penalties.

Real estate investment does carry some level of risks. Successful investors know such risks and the associated impact of every investment they make. They, therefore, plan for such scenarios, even worst-case ones at times.

Habit 5: They Think Long-Term

The successful real estate investor is long-term-oriented. That is, their focus is on sustainable long-term growth, building longstanding equity in their long-term assets as opposed to quick profits.

The most successful investors take a long-term approach to investing in real estate. They aim for sustainable growth through property appreciation and steady rental income. Indeed, not only can they sustain short-term volatility in the market but also gain from their investments over time.

Real estate markets move in cycles. The patient investors who hold on to their investments will benefit from market recoveries and long-term appreciation.

Another real estate investment strategy of Warren Buffett is investing in real estate for the long term. He once purchased a commercial property that would not pay off immediately but was forecasted to manifold value over a decade. His patience and foresight finally turned in huge profits to show how a long-term approach can give success in real estate investment.

Habit 6: They Diversify Their Investments

The most successful real estate investors know the benefits that diversification provides. The risk for investors overall is lessened, and potential returns are increased when their investments span across markets of different types.

The best investors do not place all their eggs in the same basket. They diversify their portfolio by investing in all kinds of markets, investing in mixed property types such as residential, commercial, and short-term rentals. By doing this, they spread their exposure in various segments of the market and reduce dependence on any class of property.

To further reduce overall risk, successful investors also consider diversifying their portfolios beyond real estate. They may invest in stocks, REITs, or bonds to create a more balanced and resilient investment strategy.

Billionaire real estate investor Sam Zell, founder of Equity Group Investments, has often made his fortune diversifying his investments. Rather than stake all his money in one kind of property, Zell invested in office buildings, apartments, and manufactured homes. In this way, he could still manage to succeed when the markets begin to fall because he was never overexposed to any single market or asset class. In fact, his diverse portfolio has been the major determinant of his long-term success with real estate investment.

Habit 7: They Adapt and Innovate

Successful investors are not afraid to move with the market, taking advantage of its fluctuations and also of new technologies. They understand very well that the world of real estate is one of constant change and evolution, requiring innovation to stay ahead.

Top investors are flexible and adaptable. They know when to change methodologies as the market seems to shift, be it through interest rates, economic conditions, or consumer preference.

Failure while investing is quite inevitable. The top investors are never afraid to fail. On the contrary, they learn from their mistakes and take every failure as the window of opportunity to improve. They tend to look back at the decisions they made, analyze, and accept them by readjusting their strategy.

Barbara Corcoran, the real estate investing mogul and star of Shark Tank, kept her empire running by being agile and open to innovation. In the 2008 financial crisis, when the bottom fell out of the real estate market, she had to change her approach and started to shift her focus to distressed properties, finding new ways to add value. By changing with the recession and innovating in a hurting market, she was still able to prosper in the face of uncertainty.

You might also be interested to learn about the 4 types of real estate investors.

Conclusion

Successfully investing in real estate requires knowledge, self-discipline, and importantly, strategic thinking. By cultivating the seven habits outlined in this article, you can set yourself on the path to financial prosperity.

Remember, success in real estate investment is a process. It requires persistence in learning, strong networking, due diligence, diversification, and the desire and ability to adapt and innovate. These habits, if constantly practiced, will contribute to the development of a healthy real estate portfolio and help you achieve your financial goals.