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When we hear the word temperament, our minds can’t help but shift to then candidate Donald Trump and his epic 2016 rant about having a “winning temperament” compared to that of Hillary Clinton. Like…whet? Not only was his response to the question epic, but it gave birth to the iconic Hillary “shimmy”; to which we are grateful.
I mean, talk about taking a barrage of bull$hit and just…shaking it off. But reflecting back on this moment really got us thinking about the sort of temperament needed to be a real estate investor. There’s no denying that resources, education and skills are critical to even get started with real estate investing (REI) but you don’t often hear about the temperament or mindset needed to make it happen.
This is important, because in speaking with people about REI, we’re often asked about the tactics, banks, contractors, apps, websites and tools we use but people NEVER ask about the mindset needed to do it..and do it well.
We suppose this is because most people assume they already have what it takes. But in our experience, it’s more likely they’re grossly underestimating the importance of what could be the single most important skill needed to do this well.
So when Mr. r&R was first introduced to real estate investing in his late 20s, he did what any normal person would do—ask around? He asked friends, family, co-workers and classmates if they had any experience with real estate investing and the answers mostly fell in one of three buckets. They…
- were completely clueless and had zero interest in trying (approx. 80% of people)
- knew a little bit because they or someone they know became accidental landlords before it all went horribly wrong (approx. 18% of people)
- knew a lot about it, were active investors and it was a major part of their life plan (approx. 2% of people)
Looking back, it was clear that most people had bad memories or no desire to invest in real estate. It was also clear that the people who fell in the third and tiniest bucket were just…different. They had or developed skills the other 98% of us didn’t and because of that, they had a radically different perspective on life.
At the time, Mr. r&R didn’t have that mindset either but he was deeply intrigued. Similarly, at the time, Mrs. r&R didn’t have the skills or mindset since she was knee deep in spending-mode like any well paid, young twenty-something would be. Good thing we didn’t meet each other then.
Luckily today, we TOTALLY get it and we can completely relate to the people who were bold enough to step into the arena of REI. In fact, we’re now friends with several people who have taken the leap. To be fair, many of these relationships are largely a by-product of being entrenched in the personal finance, FIRE and wealth-building community but it still exposes us to people who have done it and allows us to better understand the commonalities we all share. So after thumbing over it a little bit, we’ve identified at least three traits that are key to sharpen or develop to be a successful real estate investor.
Long term outlook
Most real estate investors are without question long-term thinkers. They are more interested in creating a collection of financial chess-pieces that will serve them well into the future than they are in obtaining shiny things today. When Mr. r&R would attend local meetups, the people that showed up were mostly men of all ages and sizes who all looked like what Mrs. r&R refers to as”shlumperdinkas“. The parking lot was filled with older model pickup trucks and family sedans. This might make you think you were in the company of novices.
However, as introductions were being made, the average number of homes owned by each attendee around the room was about 5. Some people owned upwards of 10+ properties but were still attending workshops in cold, cruddy rooms and drinking free, cheap coffee to learn how to be better.
Listen, there are tons of personal finance gurus with rules of thumb they swear by. One of the most prominent is not shy about his point-of-view on debt. This is largely because he knows that the audience he serves SHOULD avoid debt like the plague. But his audience isn’t everyone. For the 2% that do know how to handle debt, that are well-versed, well-connected and well-positioned to fully capitalize on opportunities to build their portfolios without risking the farm, debt is a great tool. Savvy investors are one hundred percent down with OPM (Other People’s Money)!
Secondly, good real estate investors know that you can subscribe to a core principle in one part of your life and not apply it in another. For example, we’ve made a point to pay off our personal credit cards in full every single month. But if we’re building our business and it requires us to free up cash, we wouldn’t hesitate to carry a balance to re-allocate money if we believed it would pay off handsomely through our business. The ability to be flexible in your thinking and to know when and how to apply rules of thumb is critical to being a real estate investor.
Like entrepreneurs, many real estate investors know that the most critical step to being a great investor is being willing to take the first step. After that, it’s merely a matter of “keeping your head down” and maintaining a consistent degree of productivity. There were plenty of days where we would’ve loved to take an impromptu vacation, enjoy another round of drinks, splurge on fancy dinners or just sit around the house in matching terry cloth robes doing nada.
But because we were committed to getting a rental, we spent our time and money driving through neighborhoods on weekends, in cold rain, flipping through listings, viewing comparable properties and analyzing rent. Our consistency enabled us to secure our first property in 2014, flip our old [mortgage free] home into our second property in 2018 and use the rent collected from both to cover a huge chunk of the mortgage note on our current home.
Good real estate investors never let up on the gas. While most people are falling into a seasonal lull due to a holiday break, investors are actively trying to squeeze one last thing in that gets them closer to their goal.
Note, nowhere in this post do we talk about tenacity, hunger, negotiation skills or any of the stereo-typically masculine or go-hard characteristics that are associated with making money. Sure, there is a good bit of hustle and get-up needed to do it but above all it requires nothing more than a healthy willingness to stop thinking and take action.
We’re not suggesting that you dress like a bum, that you abandon your value system and cancel all forms of entertainment in your life. But we do believe that IF you want it bad enough and IF you love the idea of regularly waking up to rent checks in your account; that you’ll find a way to make it happen.