There are many different ways to make money in the real estate game – but for the most part, it's a question of intelligence, knowledge gathering, and hard work. Sure, there are courses that can help instruct you on how to approach real estate, but in some key senses, all successful real estate investors are self-taught.
There's an art and a craft to real estate investing – there's instinct and then there's diligent research and the strategic use of data. Data-driven real estate strategies tend to win out over more scattershot plans - with so many tools and software options available, you can easily get access to the data you need to be successful.
Here are some good principles that smart real estate investors use to benefit from a detailed and nuanced view of a real estate market. Use them to your advantage, and you’ll be able to chart a course for success with confidence.
Plan the Real Estate Journey
In a very general sense, it's important to proceed according to some kind of road map. Too many new investors never look beyond the next individual deal. When they start out, it's a question of picking a property. Later, they acquire another property. They never look at the calendar and think long-term.
Putting your individual deals into a strategic long-term context helps you to make decisions. It's one of the keys to being a better real estate investor. That means understanding why each move serves a bigger purpose. Then, when someone asks you, “What’s next?,” you’ll always know what to say.
Pursue Market Specialization
Every property is uniquely different – but there are general categories of properties that are much different from each other. Seizing on that principle, you can get farther by being a specialist than being a kind of “jack of all trades."
Instead of indiscriminately buying up single-family homes, multi-apartment units, commercial real estate, and other types of real estate, specialize in an individual real estate niche. You'll be able to concentrate more on the details around a particular category and develop your skill set with a lot more signal and a lot less noise.
Navigate Laws and Regulations
In some senses, when you’re a real estate investor, you're kind of like a paralegal, too. What you know about FHA, fair housing laws, and even financial transaction processing can help you with your real estate investing plan. Take time to learn about “those things that only agents know” and get acquainted with some of the more esoteric parts of the real estate world.
Consider Your Network
Another good tip is to build a network of people who can help you toward your goals.
Some of these people will be other investors – real estate meetups are a key part of making your way into a local market. Others will be skilled professionals in titling, mortgage origination, wholesaling, hard money lending, or other specialization. Your Rolodex is going to be a key weapon in your search for the perfect real estate strategy.
Keep Your Books
Another key aspect of real estate investing is organization.
You want to know where all of your paperwork is, and how to combine all of it to form a coherent financial picture. CPAs and professional accountants do this for a living, but you can do it yourself, to some extent, to give yourself a snapshot of what your money is doing for you. It's entirely appropriate to hire a professional accountant, but don't outsource so much of your financial work that you're in the dark about fundamental details.
Stay engaged and stay intelligent about your capital – have the key details in hand. It’s also a good idea to stay centrally involved in planning out your annual tax filing and understanding how it impacts you. It’s rarely good enough to just say “my preparer deals with that” – that is, unless you want a sudden unexpected bill in various years.
The true real estate investor knows intimately how tax burdens fit into the picture, and includes all of those, as well as any others expenses, in planning.
Build In Honesty, Integrity and Trust
Although part of real estate investing is financial and investment acumen, some of it also relates to ethics. Don't let yourself be led astray into shady deals or get embroiled in conflict with other stakeholders. Pursue your real estate strategy with integrity, and you'll be able to forge ahead more smoothly and make more progress over time.
Create a Good Knowledge Base
In real estate investing, you can never overlook the importance of a data-driven approach that relies on good information.
You don't make good decisions about real estate investments with your emotions. You make them with market context, a granular look at a local neighborhood, and a real depth of knowledge about a specific type of property.
You're looking at the past – when the property was built, how it was renovated, and how it increased or decreased in value over time. You're looking at the present – whether the property is on the market, what owners feel it's worth, what it's been appraised for, etc. You're also looking at the future – what revenue streams can it bring in, (i.e. rental), how will it appreciate, and what will markets look like years or decades from now.
All of this is extremely valuable in any real estate investment strategy.
In all of this, today's real estate investor has a secret weapon – the Privy platform helps provide the key types of data that are so important for knowing your local markets.
As an investor, you want to know all about a specific neighborhood or city. You want to know about comparable properties, and what prices they're bringing, but that's not all.
Knowing about who has done specific improvements to other nearby properties is also an excellent ingredient to add into your real estate investing recipe.
With the right data points, Privy users are able to go out into the market with confidence. Take a look and consider how you can work this into your overall investing strategy.