Contrary to seemingly common sense, there isn’t a whole lot that the greatest real estate minds have in common. You can find successful real estate investors from all demographics, education levels, and training backgrounds. However, the top real estate investors all have one thing in common when it comes to their success in real estate: they all follow a very similar investing system. While the technical details of each system can differ, they all focus on three key areas when selecting their investments.
To emulate the greatest real estate minds and their success, the three key areas you should focus on are 1) criteria, 2) terms, and 3) network. If you ignore any one of these areas, you are unlikely to experience any long-term success in real estate. Let’s look at these areas in a little more detail.
Criteria is what defines your investment, and in this context we are referring to the physical criteria or features of a property. Where is the property located? Is it single or multifamily? What is the square footage? What amenities does it have? Basically, the information you can easily find in most Realtor’s ads. Criteria should be the main filter of your search for investments. Investing in what’s familiar, and properties that you understand, is essential to consistent and long-term success in real estate. Don’t underestimate becoming an expert in a specific niche.
Terms are how the purchase of a property is structured. Terms can include the purchase price, down payment, financing, timing, occupancy or closing costs. These are all aspects of a real estate transaction that can be negotiated ultimately leading to your profit margin. If you can negotiate great terms for an investment, you can turn a property with average criteria into a money maker. On the other hand, if you don’t have consistent control over the terms of your deals, you’ll be leaving a ton of money on the table… even on the best properties!
The last key factor is your network, and arguably the most important. No one becomes a real estate success on their own. You will need to build a network, or a team if you will, of Realtors, property managers, and contractors (among other experts) to help you with your investments and build your business. Building strong relationships in your network will help you get better deals and improve your effectiveness as an investor.
Sometimes it may seem as if there’s a secret to real estate success, but there are no secrets. If there were, however, it would be to merely maximize the basic fundamentals (criteria, terms and network) of investing. Certainly, there are tips the great minds of real estate can share to enhance the effectiveness of the fundamentals, but nobody will create success in real estate with great tips without the fundamentals.