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Six Investment Strategies of Successful Real Estate Investors

Over my career of 30 years in the real estate financing business, I have helped hundreds of investors ​achieve their financial goals through investing in real estate. I’ve learned some valuable lessons throughout the years and would like to share them with you.

1. Three Things Make for a Successful Investor: Passion, Talent, and a Market

Most successful real estate investors I’ve known love what they do and have a passion for pursuing excellence. They also have intuition, self-confidence, good communication and negotiation skills, and the ability to take calculated risks with the desire to learn from their mistakes. Finally, there must be a market and demand for what you are pursuing.​

I have a client who has been through several business cycles and weathered them all, and is now at an age when most people retire. He still has a passion for making deals not because he needs to financially, but because he loves doing it. A characteristic of his that stands out is his ability to humbly ask questions and get the opinion of others before making a decision. I believe a key to his success is the right attitude, combined with the pursuit of the right strategy, at the right time.

2. Stick with What you Know

Have you heard the saying “If you try to be the best at everything, you will be good at nothing?” Stay focused on what you know, learn it better than anyone else, and consistently do it over and over again. I see investors fail when they are overconfident in their current success and get into different types of investments with no expertise.

As a young lender at San Diego Trust & Savings Bank, I assisted a borrower who developed nothing but apartments. When opportunities arose to deviate from his business model, he chose to stick with what he knew. That developer, the late Conrad Prebys, was one of the most prosperous and successful apartment developers in San Diego.

3. Don’t Be Afraid to Take a Risk

There is no reward without taking risks. However, successful investors accept risk-based upon well thought out plans, good counsel, and carefully weighed out costs. Risk has to be assessed, looking at past experience, as well as, future opportunities.

When the recession hit in 2009, property values were down, and the market was uncertain. I had a client who came to me to borrow money to purchase foreclosed properties and was willing to risk everything he had at the time. As a lender, I shared his optimism and took a risk with him. Looking back, it couldn’t have been a better time to invest. I provided the financing on what started as one property, then turned into numerous properties. Over the years, the borrower generated millions of dollars in real estate equity.

4. Be Patient and Stay True to Your Core Values

Time is your friend. Remain focused on your end goal and stay true to your core values. Consistently weave your core values in your decisions, and you will not only succeed but be happy doing it! Over the years, I have seen impatient investors try to get rich quick by taking short cuts and sacrificing their core values. Their personal lives end up in chaos.

Fidelis Private Fund is an excellent example of what patience and living out your core values can produce. It’s taken me years of experience, personal growth, and cultivating the right relationships before I co-founded Fidelis Private Fund, a real estate mortgage fund here in San Diego. My passion is to help people achieve their financial goals; borrowers, investors, along with my associates.

5. Hitting Singles Consistently is Better Than the Occasional Home Run

Over the years, I have assisted successful investors finance the same product type over and over again. It’s not always glamorous real estate or a strategy that gives a lot of recognition, but consistency over time is how real wealth is created.

I once helped arrange financing for a borrower who had a niche for buying and managing smaller, investment residential properties in dilapidated San Diego neighborhoods. He had a simple strategy that he repeated over and over: buy two properties. He consistently followed this simple business model, and over time, created real equity, steady cash flow, and substantial net worth. Sometimes it is not what you do, but how often and consistently you do it.

6. Always Keep Your End Goal in Mind

Stay focused on your end goal. Know you may need to pivot and change direction along the way. It is crucial to have a support team that is knowledgeable and has your best interest in mind, as you navigate your investment strategies to achieve your goal.

A client of mine, an experienced investor, bought foreclosed properties and flipped them. He then changed direction, started buying properties to add value, and kept them as rentals. A mindset open to pivoting and changing direction is a critical character trait needed in today’s turbulent, economic environment.

There is no one strategy to be a successful real estate investor. It’s a combination of positive character traits, life experiences, and strong relationships. Keep a mindset to never stop learning and growing as an individual.

Do you have an investment strategy? And if so, have you had to change direction to stay on track?

 

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