When it comes to investing, one of the world’s wealthiest people has two simple rules. He’s known for saying, “The first rule is never to lose. Rule number two is to remember rule number one at all times.” Whether you’re a novice investor or a seasoned pro, there are four undeniable truths to be aware of.
Money isn’t the same as knowledge.
It’s a common misconception that you need money to get started investing in real estate. This isn’t true. This is not the case. You can start investing with no money out of pocket if you have the right knowledge. Having access to capital, on the other hand, can make investing more accessible, especially when it comes to diversifying your options. You don’t have to know how to invest in real estate just because you have the money to do so. One of the worst ways to start your real estate investing career is to go out and buy properties without knowing what you’re doing. Take the time to learn how to invest appropriately, and you’ll reduce your chances of losing money.
Experience is not the same as knowledge.
Information is now highly accessible thanks to technological advancements. A simple internet search can provide you with information on any subject. Investing in real estate is no different. Many newcomers to investing believe that watching a few online videos will automatically turn them into real-estate investors. The problem is that unless you’ve taken the time to be adequately educated, you won’t have the necessary experience to make the best decisions. There is an enormous amount of free information circulating on the internet these days. A university is an excellent place to learn the fundamentals and theory of investing. However, before you start investing, you should take a few courses or seek the advice of a qualified mentor.
Expertise is not the same as experience.
Just because you’ve had some experience with one type of investing doesn’t mean you’ll be able to invest in real estate. Your knowledge of one type of investing may not be applicable to another. Take, for example, stock investing. I’ve seen several successful day traders lose thousands of dollars in real estate investing because they lacked experience in this field. The fundamentals of each differ, but the foundations are essentially the same. A novice real estate investor could be an expert stock trader. The techniques, tactics, and methods for obtaining a profitable real-estate deal necessitate specific real-estate knowledge and experience.
Expertise isn’t the same as perfection.
Even the most seasoned investors will be confronted with a new problem from time to time. I’ve been a real estate investor for over 15 years and have flipped well over a thousand homes, and I’m still running into new problems. For example, I just bought a single-family home for our rehab division last month. During the remodel, we ran into an unusual problem that we had never encountered before. A local birdwatcher tracked a rare bird into our home’s open-air duct, where it built a nest. He then informed the city of his findings, which resulted in the project’s cancellation. The remodel had to be put on hold while we arranged for a special crew to relocate the nest. It wasn’t a significant issue in the end, but it did cause us to alter our original plans and schedule.
The point is that you never know what problems you’ll run into, and things rarely go according to plan. I tell my mentees all the time that how you deal with problems, setbacks, and failures will determine your overall success as a real estate investor.
Expertise, knowledge, and experience
It’s critical to recognize that knowledge, experience, and expertise are all necessary components of a successful real estate investing career. Listen to experienced investors to gain knowledge. By learning from their mistakes and failures, you can accelerate your learning curve. Find a successful mentor to help you become an expert, and keep in mind that some investing rules will never change.