The most successful real estate investors are those who know how to take advantage of attractive market opportunities before they become apparent to everybody else. These are the investors who always seem to be in the right place at the right time, somehow outsmarting and outperforming everyone else.
How do you become one of those real estate investors who seem intuitively to know when and where the next great opportunity will be?
“One thing all successful investors have in common is that they do their homework,” says Shawn Miller, CEO of 5 Arch. “It is not just a matter of research. It is also a matter of cultivating your analytical skills, being able to study trends and patterns so you can extrapolate where the market is going based on where it has been.”
Use Online Data to Analyze Residential Properties
We live in a fortunate age, where valuable market information is no further than your computer keyboard. There are numerous websites (both paid and free) that will provide you with data for analyzing residential properties. Zillow is the most well known; others include Trulia, Redfin, and Realtor.com. There are also membership-based analytic sites, such as HouseCanary, RealQuest, and Tableau that guide investors by providing data-driven forecasting and analysis.
When conducting your research, look for desirable trajectories in sale prices and rental income by area or even by drilling down to specific zip codes. Another tip from Miller: “Study trend lines to determine where the most desirable growth is occurring, and look at adjacent zip codes or areas to see if you can detect the emergence of similar trend lines occurring there.”
Emulate Successful Investors
Another good practice is to become a voracious reader of real estate investment magazines, real estate investment blogs (like this one!), and strategy books.
“Investors who have made it big in residential real estate are actually very generous in sharing their advice on how to achieve success,” Miller says. “Go online and Google-search the topics you are interested in—i.e., ‘how to identify residential real estate opportunities’ or ‘ways to find great real estate investments’—and you will find a wealth of great advice, tips, and strategies.”
Also helpful (and inspiring), he says: Reading profiles of successful investors and emulate their practices and strategies.
Show Your Drive—Literally
Even more important than written or online resources, however, is the willingness to log miles—literally traveling to the areas you are considering for your investment dollars to become intimately familiar with them.
“If you want to invest in a particular area, study it until you know it like the back of your hand,” Miller advises. “Drive through the area, observing whether there is active construction and thriving commerce.”
Eat at the local restaurants, and shop at the local stores. Talk to the residents so that you know their concerns and their attitudes about the place that they live, continues Miller. “Do they seem optimistic? Do they have secure jobs? Do they like the school district? Everything you find out will be valuable information in determining whether this is an area that will cultivate good investment returns.”
Develop Your Focus
The best strategy for achieving success is not to take a scattershot approach, but instead to target the opportunities that most closely fit your expertise.
“Success does not happen by accident,” says Miller. “It happens by finding a niche, becoming an expert in it, and learning to recognize opportunities that play to your strengths. When the appropriate opportunity comes along, you will be in a good position to make the most of it. That is how you become a smart, savvy, and forward-thinking investor.”
Stay one step ahead:
Turn to 5 Arch Funding to make the most of your investment dollars