By Ethan Roberts
Most real estate investors begin their careers with great aspirations, but little knowledge or expertise. Some will dabble at it for a while and eventually give it up for one reason or another. Some may do it for longer, but never really achieve great success.
I believe that in order to achieve long-term success as a real estate investor, you need to possess certain behavioral traits that will help you in all facets of investing. Here are five characteristics that will help you achieve your real estate investing goals.
1. Passion
Successful real estate investors are passionate about everything they’re doing. They read books and take courses to gain new knowledge. They may at some point pursue a real estate license. They network with others who have knowledge that will help them with their projects. They wake up early, eager to scout out new properties on the market or get to work on one they’re rehabbing. They love what they do, even though at times it’s easy to become frustrated when things aren’t going well or there are numerous delays on a project.
If you don’t really love real estate investing and feel a passion for it, you may achieve some small success, but you’ll never really produce outstanding wealth from it.
2. Perseverance
Great real estate investors, like successful people in all walks of life, have one characteristic that the majority of people don’t have. They persevere when problems arise and when things seem most difficult or even hopeless.
You won’t see a successful investor give up or quit. It’s just not in their nature. If they’re short on funds, they’ll find a way to get a loan, even if they get turned down three or four times. If they’re rehabbing a home and the old flooring is stubbornly difficult to remove, they will think out of the box to find a solution, or rent the right tool to get the job done more efficiently.
You can’t just throw up your hands and quit because you had a bad tenant who damaged your rental, or because the water heater leaked right after you had to put a new roof on a property. Great investors take it in stride, knowing that there will always be speed bumps along the long road to success.
3. Self-Discipline
A successful real estate investor has to have the self-discipline at times to say “No” to a deal, or even to the general market as a whole. Here’s a personal example:
When the real estate market was becoming frothy back in 2005–2006, and it was increasingly obvious that we were close to the top of the market, I began unloading several of the nine rental properties I owned at the time. By the time 2007 arrived, I had pared that number down to three. Over the next few years, as the market suffered a meltdown, the most difficult thing for me was to sit on my hands and not be tempted to jump back in too quickly. But I knew that until prices came down further, there was more risk than reward in the market.
With the profits I made from the sales, I paid off my home mortgage and some other debts to reduce the risk of too much leverage. Being over-leveraged would become the downfall of many real estate investors as the market collapsed.
Finally, a few years later, when prices had fallen dramatically and it once again made financial sense to purchase rental properties, I began buying homes once again.
Thousands of real estate investors lost their shirts when the market crashed because they lacked self-discipline. They couldn’t resist buying near the market peak because they let greed overtake them, or they didn’t take the time to follow the real estate news that could have warned them about a potential collapse in prices. A colleague who I respected greatly would say, “Don’t chase high prices. Let the markets come to you.” I couldn’t agree more.
4. Imagination
Having a good imagination is crucial for successful real estate investing. When you see a rundown, distressed property for the first time, you must have the ability to see the potential in the property. Turning that “ugly duckling” into a “beautiful swan” can make you tens of thousands of dollars. But if you don’t see the potential, you can’t make that happen.
Sometimes that imagination will lead you to change the structure of a house by adding a necessary bathroom or expanding the size of a kitchen or bedroom. At other times, it’s about seeing that a particular color scheme or a certain type of flooring or tile would work great in a room. Perhaps you’ll cut back some bushes to make a backyard look bigger or open up a better view of a pond.
Successful investors always have a vision, even when others think they’re crazy.
5. Boldness
To quote famous investor Warren Buffett, great investors buy when others are most fearful, and sell when others are greedy. You can’t let the media, politicians, or even friends and family frighten you into letting opportunities slip away by doing nothing.
In 2009, when real estate was a dirty word among politicians and the media was publishing daily stories about foreclosures and high unemployment, I bought my first foreclosure property in three years. I knew that even if prices fell further, the discounted price I paid would protect me from loss of value, and rental income would act as a dividend until prices stabilized.
Remember, boldness is not the same as foolishness. A great investor acts in bold ways only at specific times, when great opportunities and limited risk are at hand. A foolish investor thinks it’s good to be bold all the time.
So ask yourself how many of these behavioral characteristics you possess. The answer to that question will tell you whether or not you can achieve great things by investing in real estate.
Ethan Roberts is a real estate writer, editor and investor. He’s a frequent contributor to InvestorPlace, and his work has been featured on MSN Money and Reuters. He’s also written for Seeking Alpha, Investopedia, The Fiscal Times, ForSaleByOwner and Smarty Cents, and was one of five contributing editors to The Tycoon Report. He’s been investing in real estate since 1995 and has been a Realtor since 1998. He also teaches classes on investing in residential real estate.
