As we work through our series on answering questions about real estate investments in Seattle, we’re discussing some of the questions we hear most frequently from new investors, experienced investors, and people who are thinking about investing in Seattle. This series of blogs should help you no matter where you are in your real estate investing career and how much experience you have.
Alex Osenenko is talking with Enrique Jevons, who is also with Mynd Property Management. If you don’t know him already, Enrique has a lot of depth and a lot of expertise on the subject of investing in Seattle real estate. Not only does he manage 850 properties in the Pacific Northwest, but he also owns his own rental homes. He owns 73 of them, in fact, so there’s not a single reason to believe Enrique wouldn’t know how to help you make better investment decisions.
We’re talking today about how to be a successful real estate investor in Seattle. Alex asked Enrique to share the top five reasons that some investors are successful but others are not.
Let’s take a look at those five reasons and see what we can learn.
Define some Clear Investment Goals
It may seem obvious, but this can be overlooked by smart investors: you need to know where you’re going. What are your investment goals? You cannot get to your end goal if you don’t know where you’re heading.
This shouldn’t be a vague idea of what you want to do as an investor, either. Be specific and intentional and deliberate. Write your goals down. Make sure you have a clear idea of why you’re investing, what you hope to get out of it, and where you see yourself in one year, five years, and 10 years. These investment goals will drive the decisions you make as you buy property, sell property, and manage property.
Enlist a Team of Rockstars
Most real estate investors are smart, talented, and entrepreneurial. You’re a rockstar on your own, right?
Right, but you cannot be good at everything yourself. Even if you are good at everything, you can still be more successful when you have a talented team of equally brilliant people working with you. A successful real estate investor will have a team of people to rely on during every step of the investment process.
Know who those team members are before you need them. Relationships are critical when you’re an investor. You want to have a good attorney in your list of contacts before you need an attorney. It’s important to have a plumber working with you before your residents call in the middle of the night to report a leak or a flood. Establish these relationships quickly. Don’t try to do everything yourself. If you want to succeed as a real estate investor, you have to be willing to farm out the work so you can protect your own time and your own talents.
Make Business Decisions and Get Out of the Way
Sometimes, you can be your own worst enemy. If you’re wondering why your investment properties aren’t performing the way you want them to, take a hard look at whether you’re making the process more complicated without realizing it. A smart investor knows how and when to get out of the way.
It’s important to take your ego out of the investments you’re making. Sometimes, you’re convinced that you’re right. But, you’re not always right. If your attorney makes a recommendation, there’s a reason for it. Trust what your attorney is telling you because attorneys have knowledge and resources that you do not. Everything pertaining to your investment property is ultimately your decision. But, a lot of people make huge mistakes getting in their own way. They think they know better – no matter what the issue is.
Don’t tell your painter how to paint. Don’t tell your contractor how to follow plans or where to buy supplies. You have to know when to get out of the way.
Make sure you’re always treating your investment as a business and not as an extension of your personality. This seems like it should be obvious, but a lot of investors are emotionally attached to the properties they buy, and they have a hard time making business decisions. You need to think about this rental property as a business – always. If you’re not treating your rental home as a business, you need to start.
This stumbling block is most common with single-family homes, especially if the property owner once lived there. It might still feel like your house. But, all decisions need to be made based on the numbers. Data and numbers should drive decisions and not your emotions.
Three Things Required for Successful Seattle Investments
Next, a successful investor has three things:
It’s possible you have all three of those things yourself. In that case, you’re going to have little to worry about as someone who is investing in Seattle rental properties.
However, if you don’t have all three of those things yourself – don’t worry. You can still be a successful investor. The only difference is that you have to partner up with a person or an institution that can provide the thing that you’re missing.
It’s okay if you lack the money, for example. There are plenty of banks and lenders who can provide the money part of the equation. So, maybe the partner in this scenario is a bank or a financial institution. You can take the time and use your expertise to find the right investment property and decide how you’re going to pay for it. Then, you’ll go to the bank and you’ll procure the funding.
Decide what’s going to be an effective use of your time when you’re considering these three things. Maybe you’re an outstanding painter, so you’d surely have the expertise to paint the property you just bought before you put it on the rental market. But, you could be short of time. You want to get that property out on the market quickly so you don’t face a long vacancy period. Even having the expertise to paint, you should still hire a painter. That’s because in this scenario, what you’re lacking is time. Just because you know how to paint doesn’t mean you should be the one painting. You have to decide what effective use of your time is. There are some things that only you can do. There are other things that plenty of different people can do.
So you need time, expertise, and money – but you shouldn’t count on yourself to deliver all of those things every time you invest. Be willing to work with partners, especially when the result is more time, expertise, and money.
It Doesn’t Hurt to be Lucky
The fifth thing that successful investors need to make money on their Seattle rental properties is simple. It’s a little bit of luck. This probably doesn’t sound like a brilliant investment strategy, but the truth is there are going to be a lot of things outside of your control. You’ll be lucky and unlucky during the course of your investment career. Make sure you know how to manage yourself and your finances and your properties during those lucky times and unlucky times.
Sometimes, there are market forces that will just help propel you along. You’ll feel like you’re hardly doing any work at all, and investing in rental real estate is the easiest thing you’ve ever done. The market allows for this once in a while, and so does the tenant pool, and so do the general economic conditions. But, it won’t always be like that. At other times, you’ll feel like you are constantly running into the wind. During those periods, it’s going to be harder to make any money and you’ll wonder why you bothered to invest at all.
Just because something is hard doesn’t mean you shouldn’t do it. There is money to be made in every market, whether it’s a strong market or a weak one. You simply have to stay educated and informed so you know how to handle things that are beyond your control. You need to be flexible and willing to shift a little if the market demands it.
Sometimes, investing in Seattle real estate will be a lot easier than other times. If you’re someone who likes to buy and flip houses, you’ll be especially susceptible to market conditions. During those times that the market is on a tear and everything is going up, you’ll be able to easily cover the mistakes you might have made. But, if the market does not help you make money from those flips, you might want to hold your assets for a while until you can make some money again.
Luck is a bit of being a successful investor, and it’s smart to accept that.
These are the five common things we see with nearly all of the successful investors we work with. If you’d like more information about how to make smart investment choices with Seattle rental property, contact us at Mynd Property Management.