What You Need to Be a Successful Investor in Real Estate

To get a clear picture of what exactly it requires to succeed in real estate, we have interviewed six experienced professionals who told us about their tactics and skills: Dawson Skorczewski (Owner/CEO of Sioux Empire Home Buyers), Ray Lauzums (Founder of Poggers), Mariah Bennett (Managing Partner at Summit Ridge Realty Investments), and Thomas Vale (Principal Broker at Vale Property Advisors).

1. Define Your Goals Before You Invest

A successful investor should have a clear purpose before buying any property, what they want to accomplish and what kind of risk they would be ready to take.

As Dawson Skorczewski, CEO of Sioux Empire Home Buyers, explains:

"We all have different goals. Investment does not have a right way. What is effective for one individual might not be effective for another. Success comes from determining a strategy that best suits your financial objectives, the extent of risk you can take, and your lifestyle."

Dawson targets middle-income single-family houses, which are low-maintenance, stable rental market, and not in high-risk or highly-regulated regions. His strategy makes it clear that success is not a matter of keeping up with the times but rather knowing what fits into your own blueprint of personal and financial success.

2. Focus on Cash Flow and Sustainable Income

Real estate wealth is not an overnight creation but rather a creation of stable and sustainable income. Ray Lauzums owner of an online store Poggers, says:

"Cash flow is king. When your property is not generating steady income or when you are over-levered, then you are not investing, you are speculating.”

Ray stresses on the assessment of properties based not only on appreciation but also on the ability to provide consistent monthly returns. Cash flow investors are able to withstand market cycles and stay profitable even when prices are changing.

3. Diversify Strategically and Manage Risk

Diversification does not merely imply purchasing real estate in various places but rather balancing the various types of assets, tenants, and financing in such a way that it is least exposed.

Mariah Bennett of Summit Ridge Realty Investments suggests:

“Successful investors know how to trade between growth and protection. Diversification is not about holding everything but holding it in a strategic way in such a way that when one market fails to turn around, you do not have to fall down on the ground with your whole portfolio.”

Another suggestion that Bennett offers is a combination of residential and light commercial properties or the combination of long-term rentals and short-term vacation units to develop flexibility and several sources of income.

4. Understand Market Fundamentals and Local Demand

Although trends may inform strategy, the success of real estate is based on the ability to understand the local demand drivers, which include employment growth, infrastructure, and population changes.

Thomas Vale, the main broker at Vale Property Advisors emphasizes this fact:

"The data tells the story. What makes people live, rent, or work in that neighborhood before you make the purchase? Real estate is hyperlocal--what is successful in one city may fail totally in another.”

Vale urges investors to read municipal plans, school district rankings and job growth reports to know the direction of value instead of responding to the direction in which it has already traveled.

5. Build a Network and Learn Continuously

Investing in real estate is not a one man show. The most successful investors keep the right people around them, agents, contractors, property managers, lenders, and other investors.

Kevin Harland, Co-Founder of Harland and Brooks Realty Partners is of the opinion that relationships are one of the most underestimated assets in real estate.

"You can't do everything alone. Good network will provide you with better offers, sincere counsel and people whom you can rely on when it comes to the tricky side.”

According to Kevin, investors need to attend local real estate gatherings, online investor communities, and keep in contact with professionals working in their markets. The property market is dynamic and therefore continuous learning is necessary.

He goes on to say that there is a lesson in every deal including the ones that fail. Being a successful real estate developer does not mean never making a mistake, but learning to make them.

6. Think Long-Term and Stay Patient

Short-term gains are alluring, but long-term security is the place where the real wealth is established.

According to Sophie Tran, the Director of Blue Horizon Property Group, “the difference between a real investor and a speculator is patience.”

“Real estate pays off long-term planners. The market will go up and down, yet when you have made the right choice in property and have taken proper care of it, time is never an issue.”

Sophie advises investors not to be emotional when the market is performing poorly. Rather than sell because of fear, work on the improvement of your properties, retain good tenants and continue with cash flow. As time goes by, the value of your portfolio naturally goes up due to appreciation and rent growth.

Bringing It All Together

These six professionals concur on one fundamental idea, which is that there is no particular formula to success in real estate investments. It is about identifying the strategy that fits your objectives, your risk-taking ability, and your financial circumstances.

The usefulness of simplicity is demonstrated in the practical approach of single-family homes by Dawson Skorczewski. The fact that Ray Lauzums focuses on cash flow reminds us that true profit lies in constant income. Mariah Bennett emphasizes the need to diversify in order to cushion against market changes. Thomas Vale is concerned with the local data and trends and makes decisions. Kevin Harland focuses on the strength of establishing a trustworthy network, and Sophie Tran focuses on patience and long-term perspective.

Effective real estate investors are not following the fads or the hype. They are strict, educated and steady. They are aware of when to make calculated risks and when to wait. Most of all, they know that investing is a process, a learning, adapting, and developing process.

These principles will always stay the same, regardless of whether you are purchasing your first rental house or you are running a growing portfolio, you have to set clear goals, secure your cash flow, know your market, and think long-term. When you base your foundation on these basics, it is not just the success in real estate investing, but it is possible.