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That real estate is a challenging, albeit exciting, business is an acknowledged fact. It requires a whole lot of networking, market knowledge, talent, organization skills and determination. Even though a real estate investor does not have to study, analyze and understand all the markets in the world, it is crucial to have basic real estate skills that can contribute to a flourishing career.
8 Skills Needed For Real Estate Investing
How hard is real estate investing, you ask? While it might seem like rocket science, real estate investing can get pretty easy if you have the following skills.
Understanding Cash Flow
Understanding positive cash flow, and the expenditures that can affect it, is the core of real estate investment calculations. Positive cash flow means your income from the property is more than your expenses. These expenses consist of maintenance, insurance, property tax, long vacancies, HOA fees, mortgage, etc.
As a real estate investor, it is also good to know concepts such as cap rates, cash on cash return, and price-to-rent ratios.
Knowing The Market
One of the essential real estate skills, acquiring knowledge about your choice of geographic location and then further studying the residential vs. commercial properties in that region is of utmost importance. You also need to keep abreast of current real estate market trends, mortgage rates, infrastructural developments, rental rates, and future property developments.
Understanding Legalities
Another must-have skill is the ability to comprehend the various laws that govern the housing market. Rent Control Laws, Fair Housing Act, individual state Landlord-Tenant Laws, disclosure laws, laws about abandoned tenant properties, and eviction laws are just few of the many legalities that a real estate investor needs to know about.
Developing A Niche
Rather than focusing on ‘how to become a property investor’, serious players in the real estate market try to create a niche right from their first investment. They focus on one specific area, take time to study and understand it, and then gain the depth of knowledge vital to becoming successful in that area. Examples of niches could be high-end residential, vacation homes, low-income multi-family housing, single-family rental housing, retail spaces, or office spaces.
Communication
So much of this industry relies on communicating with a wide range of professionals, be it agents, residents, property managers, bankers, lawyers, plumbers, handymen, and a lot more. Developing soft skills like effective verbal and written communication, active listening, negotiation, and tactfulness are all critical to the success of real estate investing.
Patience
Real estate investors are facing pressures on a daily basis – right from the pressure to buy a property at a certain price immediately or regret it later, to the pressure of renting out the property as soon as possible for the income to start flowing. However, you need to understand that real estate deals take time. Also, it might take years to develop the investment portfolio you want. Having patience is an underrated skill one must possess in the world of real estate.
Delegation Of Work
Successful real estate investors know that embracing a professional’s expertise is worth the additional costs. Whether it’s a lawyer, mentor, insurance advisor, property inspector or an organization having excellent property management skills, real estate investors who have been in the business for a long time often attribute their success to such specialists. Delegating work and building a support system along the way is one of the lesser-known real estate skills.
Understanding Customers
Investing in real estate does not stop at just buying properties and renting them. It requires understanding customer needs, demands and behavior. For example, if you’re trying to appeal to vacationers, you need to know what they are looking for in a property. Maybe proximity to the city center or a tourist attraction. Maybe a well-appointed property with facilities like a coffee machine and a washing machine. Similarly, single-family home residents will be considering the crime rate in the area. Knowing the prospective customer’s requirements and catering to them can help you win brownie points.
Invest In The Right Property With BFPM
To help you decide whether purchasing a particular property would be a practical investment or not, speak to our Beach Front Property Management professionals to get an expert opinion. We possess the property management skills to help you grow your investment portfolio. Feel free to schedule a 15-minute consultation call with us.
