Residential Real Estate | Real Estate Investing | Foreclosure
As a real estate investor, it's important to constantly be thinking about ways to improve your business and stay ahead of the game.
With the new year fast approaching, now is the perfect time to start planning for success in 2023.
To help you get started, here are 15 things every real estate investor should consider doing in the coming year to grow their business.
1. Develop a clear investment strategy and set realistic goals
As a real estate investor, it's essential to establish your investment goals for the year and determine which kinds of properties you're interested in. Whether you're just starting in the industry or are a seasoned pro, having a clear sense of your goals and property preferences can help you create a more effective investment strategy.
For example, if your goal is to generate long-term passive income, you might want to focus on rental properties with a strong track record of occupancy and stable cash flow. On the other hand, if you're looking to flip properties for a quick profit, you might want to focus on properties that require repair or updating and have the potential for appreciation.
2. Constantly (if not, obsessively) research the local market
The most successful real estate investors know their market better than anyone else. One of the most important things you can do is take time every single day to research. Whether it’s the first thing you do when you wake up or the last thing you do before you go to sleep, make sure you know your investment market like the back of your hand.
The real estate market is constantly changing, and as we saw in 2022, in some major ways. Staying up to date with your local markets means you can remain the expert, better position yourself to help people when changes happen, and create more compelling offers with your deep industry knowledge.
3. Establish a budget and financing plan
Every investor must set a budget and figure out a financing plan. To start, determine how much you can afford to invest and understand the financing options that might be available to you, like traditional mortgages, hard money loans, or crowdfunding platforms. Knowing your financing plan can help you avoid surprises, investing in the wrong property type, or getting in over your head.
More importantly, you’ll be able to scale your property acquisition strategy more effectively with a solid financial plan. By solidifying which type of financing option works best for your investment goals, you'll be able to weave financial decisions into a repeatable strategy much more easily, allowing you to grow your business more quickly than your competition.
4. Understand your target market better than anyone
By deeply understanding your target market, you’ll be able to create a much more compelling marketing and investment strategy. For example, suppose you’re targeting absentee owners in a certain neighborhood. In that case, you’ll be able to craft a narrative as an investor willing to take a property they may not be emotionally invested in off their hands.
On the other hand, if you're targeting pre-forclosed properties, you can position yourself as someone who can help families evaluate all their financing options before purchasing the home from them.
5. Plan and execute a multichannel marketing plan
When you have established your financial goals, preferred investment property type, and target market, it’s time to start thinking about building a pipeline of good leads. Start by determining your property owner audience and crafting community-centric, value-driven, targeted, and multi-channel messaging.
There’s a lot to unpack in developing a marketing plan, and we break it down in our complete guide to hyperlocal marketing.
6. Focus on outbound, not just inbound (online) lead generation
It’s crucial to establish yourself as a trusted source of industry knowledge and build a Targeted, Outbound, Relevant, and Neighborly (TORN) lead generation strategy. Investing in a long-term TORN approach enables you to build your target audience across multiple channels and organically grow your brand over time.
Start by identifying the major problems your audience faces. Then, once you’ve nailed down the top five, don't be afraid to produce and distribute video, written, and short-form content around them. Use channels like Facebook, Twitter, LinkedIn, YouTube, TikTok, and Paid Ads to distribute your content.
7. Network with other real estate professionals
Building a network of real estate professionals is crucial for any investor. This could mean joining local real estate associations, attending industry events, or connecting with agents, brokers, and other investors.
Additionally, you can consider getting in close with Home Service companies as another way to generate leads. They’ll be out in the field and can let you know if they spot a distressed property that's a good fit for your investment strategy. Being connected is being in the know, and being in the know is what separates good investors from great ones.
8. Build a team of real estate professionals
There’s power in numbers. With so many moving parts in every deal, putting together a team of professionals who can help you navigate the process will ensure your transactions are smooth as possible.
While you may be able to spot obvious signs of opportunity or potential obstacles, having more eyes on your deals will help you focus on the best ones for you. Building a team could include hiring a real estate attorney, accountant, or other advisors.
9. Leverage real estate investment technology
Technology can be a big help when it comes to real estate investing. Gone are the days of spending hundreds of hours a month at the county offices searching for the public records you need. Instead, you can use many online tools and platforms to research properties, manage your portfolio, and connect with local property owners.
10. Develop a process for keeping your deal pipeline organized
Every real estate transaction has several moving parts. Each of those moving parts usually have multiple people behind each one of them. That’s why it’s common for investors to feel overwhelmed even by large or complex deal. Whether starting or scaling your investment portfolio, staying organized is critical for maintaining your deal pipeline.
Make sure to establish a method for keeping accurate records of your transactions, contracts, and other essential documents and maintaining a schedule to stay on track and meet deadlines. It’s a lot of upfront work, but once you’ve got your system down, you’ll be in a much better position for growth.
11. Understand how legislation can impact your investment strategy
A wise investor always stays up to date with the newest legislation. Real estate investing is greatly influence by a rapidly changing legislative landscape, and knowing which laws are passed can help you avoid any potential roadblocks in the future.
For instance, Nevada recently passed SB186 which makes various changes to the foreclosure process in the state. A major part of the legislation forbids homeowner's associations from purchasing at the foreclosure auction of units within their association. Other additional parties related to the property/sale/association/prior owner are also now forbidden from purchasing at auction. Depending on your strategy, this may have major impacts, and staying aware of it is crucial to ensuring success.
12. Fine-tune your negotiation and closing skills
When it comes to closing deals, no one is ever perfect. However, practice will make you stronger at it. Repetition and practicing objection handling will help prepare you for situations that may arise during the negotiation process.
Of course, you'll also need to know how to work through and complete all the necessary paperwork to close. Leveraging every opportunity you can to work with agents, brokers, and other professionals while finalizing transactions will help you become more intimately familiar with the process.
13. Develop a system for managing and maintaining your properties
Owning and investing in real estate also means being responsible for managing and maintaining your properties. This could include handling repairs, collecting rent or lease payments, and ensuring your properties comply with local laws and regulations. As you build your portfolio, you’ll develop a trusted network of local contractors for issues that arise.
Additionally, ensure you have a system in place for handling any maintenance issues that arise swiftly. If you’re renting out your properties, you’d hate to have unhappy tenants. Of course, you can always outsource it to a property management company to avoid a lot of the headaches that come with managing properties yourself.
14. Analyze and track your portfolio performance
Regularly analyzing and tracking your performance is a key part of being a successful real estate investor. This means regularly reviewing your portfolio to assess its performance and identify areas where you can improve.
In particular, consider return on investment for each property, occupancy rates for your rental properties, or overall portfolio value. By regularly reviewing your portfolio, you can better understand how your investments are performing and identify any opportunities for improvement.
15. Stay up-to-date on industry trends and best practices
Like obsessively researching your market, investors must stay abreast of industry trends and best practices. The best investors are the ones who stay ahead of the curb, and keeping up with what industry leaders are doing is a great way to do so.
In addition, taking the time to read industry publications, attend local educational events, and network with other professionals are all ways you can find new, innovative approaches and apply them to your day-to-day.
