Alright, I confess, this wasn’t my original idea. I actually stole the idea from one of my real estate mentors, Jim Randel. Jim is author of one of the best real estate books out there Confessions of a Real Estate Entrepreneur. He is also writer and creator of the Skinny On series of books. These books can be read in less than 2 hours and are full of fun stick people sketches and easy to understand concepts but they pack a punch full of information.
I read Jim’s weekly newsletters and a recent one was about “10 Reasons (Some) Entrepreneurs Underperform”. It got me thinking about the reasons real estate investors underperform.
Now, this is not a scientific study. I did not go out and survey 5,000 real estate investors and determine who were successful and who were not and then look at the characteristics that shape their success (or lack thereof). This is based on years of investing ourselves and what we have learned from other successful real estate investors.
If you lack these traits (or characteristics), there is a good chance you will underperform as a real estate investor. You don’t have to have ALL of these, but the more you have, the more likely you will be highly successful.
So, without further adieu, here are my 10 + 1 Reasons Why (some) REI’s Underperform.
1.Passion – I feel strongly that if you have passion, real passion about real estate (and investing in it), you will perform better than if you don’t. We know quite a few investors that are not passionate about real estate that have been successful but they feel worn out and want to leave the business. The only reason they don’t leave is because it’s making them money … but they aren’t having fun and they aren’t making as much money as they would (I think) if they were passionate about it. Besides, why spend so much time, energy, focus, and money on something you don’t love? Life is too short!
2.Mental strength– There are so many times where you may want to just give up because you’re doing so much heavy lifting mentally. Challenges like insurance issues, and property financing troubles, and tenant challenges are part of the business of real estate investing – be strong and you’ll do well. And by the way – the more physically fit you are – the better you’ll perform mentally. That’s a fact that has been proven by scientific study.
3.Belief– No one, and I mean no one will (or should) believe in you as much as you do. If you don’t really believe that you can be a successful real estate investor, then you may as well stop trying. There will be times when it seems like you are the only one that believes in what you’re trying to do so you have to be there for yourself! You should also surround yourself with folks that believe in and support you … but that’s a different point.
4.Guts– You have to be willing to go the opposite direction from the rest of the people you know. You have to be able to make your own decisions and have the guts to take action on them. This is not an easy thing to do especially when you first start out. And, to continue and advance as an investor you will still need guts to try new real estate strategies and techniques. In fact, we are working on several creative techniques right now and believe me, my guts are rumbling and churning as I push myself to get’r done. The more guts you have, likely the better you’ll perform.
5.Integrity– Sadly, I have met many folks who have become successful without integrity but I believe that their success is likely only financial. I am confident they don’t have the relationships nor the personal satisfaction that comes with doing business with integrity. Doing business in a way that treats everyone with respect in turn makes you easier to respect and like … and makes it easier to attract the folks that will help you grow your business.
6.Focus– This is probably the most underrated trait or action for becoming successful. If you lack focus, it is still possible to become successful. Heck, over the years I have had trouble staying focused but I have still performed fairly well in the REI game. But, my lack of focus has certainly played an important role in keeping me from reaching my full potential. And, the best part about focus, along with most of these other traits is you can learn it/them! In fact, Julie’s been helping me to re-train myself to become (and stay) more focused! I am getting better all the time (at being focused) and our achievements are moving in sync with our focus.
7.Communication– If you dislike talking to people, emailing, or just all around don’t communicate well with others, good luck performing and being successful with real estate. You have to communicate constantly with realtors, mortgage brokers, banks, accountants, lawyers, vendors, buyers, tenants, appraisers, inspectors, contractors, the list goes on and on. If you aren’t at least somewhat effective at not only getting your point across but also being a good listener and understanding others, forget about being in the REI game.
8.Hustle– Lining up your joint venture partners, obtaining financing, managing all the appraisers, inspectors, realtors, placing and showing tenants the property all require a large amount of hustle. Sure, you don’t need to hustle 365 days a year to perform well, but you sure better be able to hustle every time a deal starts to come together!
9.Commitment– Are you committed? Really committed to being an amazing investor? Are you making it a priority everyday that you do something that will move you towards your goal of being a real estate millionaire? Now, you don’t have to do something everyday, but your level of commitment is directly related to becoming better, stronger, faster, smarter, and wealthier. No commitment = Little to no payoff.
10.Persistent– In my humble opinion, this is absolutely the most critical reason why some real estate investors underperform. If you want to succeed in this business, you HAVE to be persistent. You will find the best deals by continuously following up on opportunities. You will secure the best financing by continuously trying to find a better option. If your partner backs out at the last minute you have to pick up that phone again and again until you find a new partner. Keep trying, keep pushing, keep being persistent. Do not give up.
Support/Network– this is my +1 (of the 10 + 1) reason or trait that is why some real estate investors underperform. I call it +1 because it’s not necessarily within you….it’s those around you. All of the 10 traits I mentioned are part of who you are or who you need to be, but this is those around you. I have yet to find 1 successful real estate investor that doesn’t have a good support group or network around them. This goes beyond your realtors, brokers, insurance agents, accountants, etc. This is the someone or some people who are there when you need them most. They give you that “push” or helping hand when your persistence, hustle, and guts are on empty. This could be a spouse, friend, investing partner, business partner, parent, child, or even mentor. This is one of the reasons we always suggest investors join real estate investing clubs or start investing with a like-minded individual. You will not only learn a great deal from that support person, but you can also look to them for help or guidance when you struggle.
Sure, there are likely several more traits that you need to have to rise to the top of the real estate investing pile, but if you have most (or all) of the above, you should become a successful real estate investor.
“So what do we do? Anything. Something. So long as we just don’t sit there. If we screw it up, start over. Try something else. If we wait until we’ve satisfied all the uncertainties, it may be too late.”
~ Lee Iacocca
Published on January 31st, 2010