Revealed: 7 Habits Of A Successful Real Estate Investor

Real estate is one of the most rewarding asset in your investment portfolio and is also capital intensive and does not offer quick liquidity.

Investing in real estate requires patience and acumen. Sometimes it takes several years to generate some good returns on investment in real estate. Despite all the challenges, there are people who have made fortunes in real estate investing and studies reveal that they all have some common traits. Here are seven most effective habits of highly successful real estate investors:

Investing with a buyer's mindset

For many real estate investors, buying an investment property is easier than buying a home for end-use. Why? Successful investors buy a property after doing all the due diligence they would conduct before buying a home for themselves. This is a wrong practice.

By doing this, you would come to know about all the pros and cons of a property that a prospective buyer would also think about when you make that property up for sale.

“Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world” –Franklin D. Roosevelt

Taking a holistic view

Investing in real estate involves large capital. It also involves additional costs, including stamp duty and registration charges. If you opt for an under-construction property, you will be required to pay up taxes.

Buying a ready-to-move-in property comes with registration transfer charges and recurring maintenance costs. Such properties are also subject to property tax. It all adds up to the total cost of your property. Successful investors account for all such costs at an initial stage itself and then analyse whether or not the property under consideration will be able to generate returns that surpass all the costs.        

Developing sound understanding of the markets

Successful investors keep themselves up-to-date with the market developments. First, they evolve clear preferences on the types of properties they want to invest in and then do a thorough research about those markets at both macro and micro levels.

They develop a sharp understanding of the markets they enter into. Legendary investors like Donald Trump and Warren Buffett spend a lot of their time in reading. Buffett once said, "I do more reading and thinking, and make less impulse decisions than most people in business." This explains it all. Investing should not be an impulsive decision.

“Before you start trying to work out which direction the property market is headed, you should be aware that there are markets within markets.” — Paul Clitheroe

Maintaining high ethical standards

Honesty is the best policy. Successful investors ensure a transparent process with prospective buyers. This helps them win buyer's trust and in a people-driven sector like real estate, it matters.

They talk about potential challenges and issues attached to their properties and develop an action plan to sort them out.

Developing the core

Real estate is a vast area. You can't be the jack of all trades and master of none, when it comes to putting a large capital at stake. A successful investor will know this very well. He/she will develop their own niche in some specific segments.

This could be anything: type of property, including commercial, retail or residential, or the nature of properties such as those meant for Non-Resident Indians (NRIs), senior citizens, students or single family.       

Building a strong network

It is a never ending process. Successful investors keep growing their network with each passing day. They know that not everyone in their network can help get a 'word-of-mouth' whenever they make their properties up for sale in the market.

Understand the risks

Going back to Buffett's statement, investing is not about making impulse decisions. It involves a considerable degree of risk. Successful investors factor-in all the types of exogenous and endogenous risks that can impact the prospects of a property and then take a decision.

Even after buying a property, they keep on appraising their portfolio in terms of potential risks. Of course, real estate investing is a long-term game; at the same time, there is no room for complacency and ignorance.

The bottom line

Real estate investing is an art. An art that can make a fortune for you! All you need is to follow the above traits and keep learning.