In a world where most college students have no clue about retirement funding, but own at least 3 credit cards, and the average American household debt is just shy of $250,000, I’m always a little leery of playing with intangible assets in my personal finances.
But is real estate investment worth the risk and confusion?
REI is no small endeavor, and most people who get into it end up being involved in it for the rest of their lives. But to me, that’s evidence that, for those who diligently put time, effort, and strategy into REI, it pays off — and not just their debts.
So how do you know if you’re the kind of person who would succeed at REI? Here are some characteristics of most investors out there who thrive in this practice.
1. They’re not all gurus.
Yes, most of the blogs and journals you’ll see feature some of the world’s top investors, and are chock full of wonderful wisdom. But nobody knows everything about investment. Just as college courses are more specialized than elementary school courses, most investors will move on over time to specialize in just one type of investment (commercial or residential, REIT or crowdfunding, etc.).
Everyone starts somewhere. Everyone gains knowledge over time. Be patient with yourself and your knowledge, and be assured that you’ll learn as you gain experience if you don’t give up.
2. They’re not all nerdy math whizzes.
Many successful investors are Harvard business graduates and professional finance connoisseurs, but you don’t have to be 100% left-brained to invest in real estate.
RE Investment is not an exact science—it’s part strategy and part art. Investors are diverse in their talents, strategies, investment styles, and personalities. An intuitive risk-taker is often at least as successful as a calculated, conservative investor. The main idea is to figure out your unique investment style over time, find out what works, and stick with it.
That said, you definitely need to know a few things about math to invest well. So make sure sharp arithmetic is a part of your strategy, whatever it might be.
3. They aren’t all self-interested crooks.
Just because you’re working with large sums of money doesn’t mean you’re a greedy workaholic. Real estate investment is actually a wonderful way to help build up communities and cities, bringing value to a group of people. Commercial REI catalyzes the work of people with amazing businesses that will help other people. And residential REI helps increase the standard of living for people who are good stewards of the places where they live. If you want to make a positive impact on your community, RE is a powerful way to do that.
4. They aren’t ignorant of laws.
Some of us detail-oriented folks might enjoy reading up on laws and making sure we abide by them. But not all of us are that way. Even if you don’t like legal things, though, you really do need to find a way to learn the laws and contracts involved in REI so you don’t get taken advantage of. So read up. Talk to the experts.
Many Real Estate Crowdfunding platforms allow you to chat with experts about deals on their sites, and what they entail. Most have both email and phone information, and one site (Patch of Land) even allows you to chat online with the platform’s founders, who make it their business to make their investors successful.
4. They’re not all multi-millionaire businessmen.
Since most Americans are in the middle-class, most investors end up starting with small investments and building their wealth over time. For some, a first investment might become their first home — a residential house flip.
If you already own a house, RE crowdfunding is a great way to start small, with a minimum investment of $5,000 on most sites, some even less.
And for the record, not all investors are men.
Don’t be intimidated by the stereotypes and stigmas surrounding real estate investment. It’s not for everybody, but as is the case in your investment portfolio, diversity is better. Regardless of your style, background, and personality, you can be successful at investment. Just make sure you bring the experts along the way, don’t dodge the legal and financial details, and persevere.
Real estate investment is a type of business. Treat it as such, and mix in your unique style, and you’ll very likely find it will not only increase your personal wealth, but teach you valuable wisdom and even help enrich your community.
Meg Baatz is on the marketing team at Patch of Land, a platform that’s growing out of new RE solicitation and crowdfunding laws to help fulfill RE opportunities formerly impossible with REITs, mutual funds, and traditional investment. Save time and be in control of your investment shares at PatchOfLand.com.