Do You Have What it Takes to Be a Mini Mogul? Part 3, addresses the ingredients you will need to produce the success that you desire and are capable of achieving with real estate investing.
So how did an ordinary guy like me end up with a portfolio consisting of hundreds of rental units and a cash flow that's more like a cash torrent? How did I become a real estate mini-mogul, enjoying freedom and self-confidence?
I practiced some of the essential traits that most successful investors possess as was outlined in Part 1 and Part 2 of the Mini-Mogul series, such as: determination, energy, people skills, optimism and knowledge.
In this final installment I want to impart with you the final five traits and habits that will only make your real estate investing career easier, successful and give you lastingness in this business.
Trait #11: Integrity
If you are to succeed in real estate, you must govern your every action with integrity. I define integrity as consistency in word and deed. If you say you are going to do something by a specific time, you deliver. Your reputation precedes you, and acting with integrity keeps doors and opportunities open to you. If you have a reputation for being dishonest and a cheat, it will catch up with you.
If you are trying to buy a property and you have a bad reputation, the sellers will be skeptical of any offer you make, no matter how fair it might be. If you are trying to fill a vacancy but a group of angry tenants has created a Web site to list your many failures to follow through, then you're in trouble.
I belong to many real estate investor groups, where we trade information we believe will be helpful to one another. At some point the discussion will turn to group members who are absent. The comments might include something along the lines of, “Joe Doe is an unfair negotiator” or “James Able cheats his contractors.”
How do you conduct business? Do you set high standards for yourself? If your every move in the business arena were publicized on the front page of your local newspaper, would you feel proud of yourself, or would you be mortified?
Do you know the difference between what is moral, immoral, or amoral? Do you know the difference between ethical and unethical actions? Do you think telling the truth is a choice, determined by circumstances?
I personally don't do business with people I don't trust, and obviously I am not the only individual who feels that way. If your record does not make you feel proud or good, then I'd suggest you turn yourself around and re-create yourself before becoming an investor.
Trait #12: Ability To Do Simple Math
I've always viewed real estate investing as “doing the numbers.” To be successful, you must be able to add, subtract, multiply, and divide. Beyond basic arithmetic, you will need to understand certain concepts well enough to complete the calculations. This means Plugging in the numeric data in the correct places in an equation.
For those of you who are arithmetically-challenged, some manufacturers such as Texas Instruments or Hewlett Packard offer affordable, simple-to-use handheld calculators specifically designed for real estate professionals. These handheld calculators are programmed to amortize loans, figure net present and future values, and calculate internal rates of return. In addition, PC-compatible software programs will provide you with spreadsheet analyses.
Are you a math whiz or math challenged? Are you willing to learn the concepts necessary to run your own calculations and use the results to make decisions? Are you willing to arrange for tutoring or to enroll in a math class – or even a real estate class that includes math in the curriculum – to fill this need in your education?
I have a friend who never did well in math in school, and she took her last math class as a tenth-grader in 1964. Forty years went by. She purchased a handheld calculator for real estate professionals and signed up for an appraisers class. She was so nervous about failing the exam, she made herself sick. But she concentrated on the work and did very well on the exam. The moral? Concepts that may have been too difficult for the school-age brain might be easy for your more-developed, sophisticated, adult gray matter.
So remember Trait #6 and approach your learning with optimism!
Trait #13: Courage
Owning or controlling real estate means taking risks. While risk can't be avoided, it can be intelligently controlled by way of good decision-making and sufficient knowledge of your intentions. As an investor, you will need the courage to take risks and to face the
consequences of your actions. You have to understand that you could lose money or even go bankrupt.
Are you able to feel some understandable anxiety about undertaking this new (and costly) enterprise and yet move forward with your plans? Can you tell the difference between a calculated risk and a foolish one? Have you attempted new ventures in the past? How did they work out for you? What did you learn from them that you can apply to your real estate investments?
If you are in a long-term relationship or have a spouse, does your significant other encourage you to move ahead with your intentions? If your investment doesn't work out and you lose money, do you have a fallback plan? Are you willing to do whatever is necessary (and legal, of course) to get back on your feet?
Some anxiety is natural when you are first starting out. Buying property is not like picking up a pair of jeans at the discount store; you are committing yourself to a lot of responsibility – financial and otherwise. If you felt no trepidation, I might wonder if you truly grasped what real estate investment was all about.
The courage I refer to here isn't in the same category as the kind you need in a foxhole in the middle of a war zone. Entrepreneurial courage simply needs to override paralyzing fear.
Trait #14: Self Control
Has anyone told you that real estate investing is uninterrupted delight? They were kidding. Some of the challenges and annoyances and aggravations you will face require emotional maturity and self-control. I'd like to share a few of the less than delightful challenges you may experience (like I have):
- You work very hard on a deal for several months, and it falls through
- Needing to rent out an apartment, you wait for an hour in sub-zero weather, and the prospect does not show up
- Your tenant has made it their life's mission to drive you crazy with unreasonable, pointless requests and loves to threaten & scream at you.
Will you be able to absorb these aggravating events and move ahead? Will you be able to keep your emotions out of the business?
If a deal falls apart, can you believe that this is for the best and look for the next deal?
If your unit isn't renting or selling, can you remain relaxed and focus on new solutions? How about taking a look at what your competition is doing? If you have unreasonable, demanding tenants, can you dream up ways to improve your relationship with them and reduce your stress level?
The world of real estate investing is not perfect, and some days won't be much fun. (This is an understatement)
Trait #15: Desire To Improve Your Life
I grew up fairly poor, as did many of the investors I know. Much of our motivation to enter real estate investment was a strong desire to make our lives better. We didn't want to perpetuate the lifestyle of poverty and worry that our parents suffered as adults and we endured as children. We wanted to improve our situation. We wanted to live a life of prosperity and control our own destiny, and we were willing to work very, very hard to make that happen.
What is your motivation for entering real estate investment? Are you committed to making your life better? What reason is behind that commitment? Is the reason core enough to fuel your hard work and long hours? Is it strong enough that you will keep going and refuse to fail?
This strong desire has motivated me to become a mini-mogul. I have succeeded in reaching my goals, as have many of my colleagues. The key is to have the determination to do real estate investing.
These are the fifteen key characteristics I consider important to becoming a successful real estate investor. Most of us are strong in some areas and have room for improvement in others. Fortunately many of the traits can be developed or learned. Do you have what it takes?
I hope so. I would like to see you succeed.