Developing new relationships in real estate is key. This is a relationship business, and as you develop closer relationships, better deals will start coming in. You can begin to negotiate better terms, especially when you’re writing a larger check, and will eventually have access to special incentives that will set you up for financial freedom.
There are always going to be sponsors looking for capital. You’ll receive letters in the mail, invitations to dinners, and other similar advertisements or scams attempting to draw you in. If you’re a high-income earner, sponsors are trained to target you and hope that you won’t take the time to do your due diligence.
You have to be skeptical about every potential investment opportunity like it is your last dollar. You’ve worked hard for your money, and you must practice caution before going into a partnership. Before making any investment decision, there are several critical components to consider:
- How long has this sponsor or company been investing in real estate
- How precise is their investment data; they should offer detailed monthly or quarterly reports
- What is their investment strategy?
- What is the risk, and how is it mitigated?
- & More information you’ll learn to research as your real estate experience expands…
It is possible to obtain financial freedom through passive investing. While starting with private investments or a single sponsor is possible, active investing can quickly become a full-time job. To become truly passive, investing with a trustworthy company or real estate manager while continuing to do your due diligence is key. Suppose you can find a sponsor, team, or management company that has a track record of reviewing properties carefully, consistently produces high returns and demonstrates a genuine interest in protecting their investors’ capital. In that case, these are the types of investment partners you should look for.
Careful Research Leads to Success in Passive Investing
Vetting potential partners carefully is the first step. After experiencing many mistakes investing with unscrupulous real estate investors at the beginning, we realized that there’s no reason not to take the extra time to research carefully. Having a few high-quality partnerships is always better than investing with several questionable ones. Many sponsors flash overly optimistic returns, so it’s essential to research their financial track record first. Objective financial data will usually expose if these individuals are operating with integrity, or are simply after your hard-earned capital.
While learning to analyze potential partnerships, we learned to replicate the methods used by successful investors. We take the time to explore the numbers, evaluate the portfolio, and aren’t afraid to ask tough financial questions.
Transition to a More Reliable Investment Opportunity
Before our passive investing journey began, we were investing in stocks without much success, and our annuity (while it had been successful) was losing steam because of market changes. Instead of letting our money flounder in the markets, we began transitioning into passive real estate to better protect our wealth.
We wanted something that would mitigate as much risk as possible. Real estate was the better option and showed promise with diverse opportunities that were safely hedged against broader market fluctuations.
Unlike traditional IRA or other investment funds that you have no control over, a self-directed IRA can be utilized to target real estate. After learning about basic investing strategies and carefully researching the partners or companies you would like to invest with, you can begin transitioning to a more passive investing strategy.
After finding a few partners or companies that you can trust your money with, you’ll experience several advantages that come with a more passive real estate investing strategy. Many passive investment opportunities (like a self-directed IRA targeting real estate) offer benefits like:
- Tax-deferred gains preserve your capital
- Avoid personally managing real estate deals
- Regular monthly or quarterly payments
- Easily track your portfolio with monthly or quarterly reports
- & More passive investing advantages…
Invest in Yourself First
Instead of trusting in an advisor or a fund, you have no control over, learning the essential steps to begin investing in real estate opens new doors. Whether you learn to start a business, buy a home, or start with a small rental unit, there are many routes you can take to become a successful investor.
If you’re just starting, finding a trustworthy partner or reliable mentor is a great place to start. At Levine Capital, we’re open to fielding any real-estate-related questions and are more than happy to share our wealth of real estate expertise with investors interested in learning more.
There are a lot of real-estate gurus out there who will promise you the moon. Our advice is free, and our goal is to help people with realistic advice. We share our knowledge in an ongoing effort to prepare new investors with the tools required to find success while assisting them to avoid the mistakes we made early on.
Truthfully, we didn’t have the knowledge or experience at the beginning either. We were lucky to find reliable mentors and friendships that nurtured our growth. Getting started can be a challenge, but if you find the right people, begin creating new income opportunities, and continually invest in your knowledge, achieving success in real estate is a realistic goal.
Successful Investing Requires Discipline
It takes discipline to become a successful investor. Instead of partying, we prioritized learning valuable material, relentlessly invested in ourselves, and developed an internal drive to learn from our mistakes and recalibrate our efforts. We studied what unsuccessful people were doing, and did the exact opposite.
Developing a disciplined mindset is strengthened by surrounding yourself with an environment that supports your success. Instead of letting stressful circumstances define your actions, learn how to properly manage these circumstances and turn this energy into productive action. By taking action and searching for a solution, rather than dwelling on mistakes and self-medicating with drugs or alcohol, there is always a solution to overcoming the toughest situations in life.
There are a wealth of resources that will help you to cultivate this mindset. While learning and growing, continue to surround yourself with quality people that nurture your disciplined mindset. When you learn from people that have the real-life experience and dedication it takes to succeed, it’s only natural that you begin to replicate these actions in your own life.
Don’t be afraid to ask questions and continually seek guidance from others that have been down the path to success. Finding an appropriate mentor and cultivating an environment aligned with your goals takes time; be patient with yourself as you learn, grow, and invest with people that care about your success.
Gradually Apply Your Newfound Knowledge
As you nurture your investing knowledge, begin looking for opportunities to apply your new knowledge in real life. Finding a trustworthy partner or management team is just the beginning; Hopefully, these partners demonstrate a vested interest in your success, which will naturally protect you from a majority of the common beginner investing mistakes.
However you plan on beginning your investment journey, whether it’s through a new business, new partnership, or independent rental property, remain focused on the fundamentals. Always research financial track records, study new resources, and constantly remind yourself why you want to succeed.
Learning to become a successful investor is an active process. If you continually push yourself to learn new things, continually build trustworthy relationships, and acknowledge that it will take hard work to achieve your dreams, you are already on the path towards financial freedom through passive investing.