Most new investors have misconceptions and make mistakes as they're starting out. It's part of the process, and it's how we learn! Don't beat yourself up if you overpay for your first property, or make extraneous renovations. After all, experience is the best teacher.
However, there are a few lessons that you should learn as quickly as possible in order to get in the right mindset, and most importantly, be profitable! Here are five things every successful and smart real estate investor does:
1) Falls in love with ROI. Return on investment is the number one metric that will make you successful as a real estate investor! It doesn’t matter what the house looks like. All rental homes are simply four walls and a roof. Successful investors fall in love with ROI, not a cute little bungalow with beautiful landscaping in a charming neighborhood.
2) Purchases properties in the right rental markets. New investors might begin searching for properties in their city on Zillow, or drive around their neighborhood looking for local homes for sale. But successful investors know that the most profitable, worthwhile investments are most likely not located in their backyard.
3) Hires a property manager. Hiring a property management team makes real estate investing simple and passive! A skilled property management team is an indispensible part of your success, and will make your business scalable.
4) Overestimates expenses. In my ROI formula, I remove 40% for vacancies, repairs, and expenses. Expenses are inevitable in any business, and real estate investing is no exception. Successful real estate investors are conservative with their numbers, and are able to cover any expenses that should arise.
5) Realizes cash flow is the end goal, not the first step. Successful real estate investors understand that gaining cash flow is a process, and there are a couple phases to go through before you reach your ultimate goal.