12 Apr Why Real Estate is the Best Investment + 3 Traits to be Successful
Imagine this scenario: I hire you to work for me and say I’d like you to start in sixty days. You accept and move to the Denver area. You work for two weeks. I’ve told you your rate and explained you’ll get paid every two weeks. But two weeks rolls around and you don’t get a check.
You would probably ask, “Where’s my money?” And you have every right to ask that question. Demanding your income is within your rights.
In my book Money Mastery, I talk about something called the Triple “X” Factor. I define the first X as your work income, or Level 1 Income. The second X is your investment income, or Level 2 Income. So, think nothing about demanding income when it comes to Level 1 Income. You worked for the money, and it is rightfully yours. But with Level 2, we back down. Or do we?
Why Real Estate is the Best Investment
Instead of backing down, I suggest that you must demand income on your investments as your first priority. In fact, I’d go so far as to say that the question of income is one of the first questions you should ask in any investment that you make.
The financial industry says we’ll use the Buy-and-Hold strategy, where we buy stock or invest in a mutual fund, and hold over ten years. But if it’s money that you are personally investing, you never want to get too far removed from the income coming in from the investment. We must push the investment to begin to pay us now.
So, why does this matter for real estate investors? Well, you want to graduate from buying and selling to producing income without selling. It’s the difference between picking fruit from a tree and chopping it down. By picking fruit, you didn’t kill the tree so it will produce again next year. You don’t have to start over.
This is why real estate is awesome. You can rent out your property! It is income without selling. You have to sell stocks for income. But in real estate, you can rent. You don’t have to replant the tree each time. The best way to function at Level 2 (the second X) is to have your investments pay you a consistent income. To do that, you need to demand income as a priority.
Now you know why real estate in the best investment. But you may be asking, “How do I become a successful real estate investor?” I’d like to recommend three traits that you should begin developing today.
3 Traits of a Successful Real Estate Investor
1. Be patient.
Think back through the information I just gave you about second-X income and investments. It might be obvious, but you must be willing to play the numbers game. Without a doubt, real estate investing can take time.
You’ll need to look at many properties – don’t settle immediately.
You’ll also need to know your area and your competition.
And you’ll have to invest a lot of time up-front.
It will get easier and quicker as you become more experienced. You will build that second-X income. But you need to be patient in the meantime.
2. Be resourceful.
Again, this may go without saying, but a real estate investor must be resourceful. You will need to be able to find bargain properties – usually distressed properties need cosmetic improvement. ‘Distressed’ also describes the situation of the seller – out-of-town owners, divorced owners, etc. You can usually tell if a property is distressed by the listing price.
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You’ll also need to learn how to properly inspect properties cosmetically. Keep up on design ideas, and be creative in ways to add value to the property. Can you convert a single family home into a duplex? Can you easily add a bathroom or another bedroom? Use your resources and stay wise.
Finding a bargain property, fixing it up, and renting it out is the best way to build your real estate investing business. Just be resourceful along the way.
3. Be humble.
In other words, don’t do it all by yourself. Use real estate agents. Ask potential real estate agents if and how long they’ve owned investment properties. Then, see if they work with any contractors. Also, ask if they or another agent they know manages properties. Finally, explain your formula and ask them to bring you only properties that meet it.
Always remember that you make money when buy not when you sell. All in all, don’t be afraid to ask for help!
This is a learning process, and it’s going to take some time to receive those rent checks in your mailbox. When you do, you’ll finally be earning level 2 income. Real estate is the best investment – seriously! Stick with it and you will succeed.
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