Every experienced real estate investor knows the phrase “jack of all trades, master of none but much better off than a master of one” is incredibly accurate. While it’s not necessary to be a real estate savant, investors will have their fingers in quite a few pies. If you’re looking to break into the world of real estate investing, read on to learn a few skills every food real estate investor should have.
Understand the Concept of Cash Flow
Many factors contribute to how much return you’ll receive on a property, and how much money you’ll receive should exceed the money spent, known as “positive cash flow.” Many variables, such as maintenance and HOA fees, vacancy rates, insurance pricing, and more, affect positive cash flow. This concept will be at the heart of your investment calculations and help guide you toward profitable investments.
Become Familiar With Market Conditions
Investing in real estate comes with risk, as the market ebbs and flows in response to the economy. While you can’t control the economy, becoming familiar with market trends and how conditions affect those trends is one of the most important skills every real estate investor needs. You can start by becoming familiar with the real estate market cycle and its four phases: recovery, expansion, hyper-supply, and recession. Additionally, keep an eye on the market of the specific area you’re investing in, mortgage rates, rental rates, infrastructural developments, and future property developments.
Prioritize Communication and Patience
When you’re an investor, you need quite a few people on your team, such as property managers, bankers, insurance agents, lawyers, repair persons, and many more. Proper communication with tenants is particularly important because there’s an inherent power imbalance when you deal with shelter and safe haven–their home. So don’t take communication, kindness, respect, and understanding lightly. They are just as important as hard skills.
Additionally, your negotiation, communication, and listening skills must be up to the challenge, along with your ability to stay diligent, determined, and patient. Developing a diverse real estate portfolio takes years, and there’s a lot of pressure that comes with the job, so remain patient and steadfast as you navigate into this new venture.