Are you trying to make a lot of money through real estate investing?
I was too. And I did; I became a millionaire. And then I lost it all. Losing it all taught me very important lessons about the importance of calculating investment risk and how to make safe and profitable decisions.
Knowing what I know now, here are a few simple steps for making calculated risks for sustainable investment success.
- Don’t Be Lazy
It’s so easy to rest on your laurels when you start making good money. Maybe you’ve made $20,000 on a house flip and you’re feeling great. If all you do is flip houses, you’re making yourself susceptible to devastating swings in the market. Set a goal, reach that goal, but don’t stop there. Find ways to diversify and systematize your process so you can shield it from risk.
- Put Systems in Place
I knew I was good at buying properties under value, but that strategy isn’t enough to make it sustainably successful. After losing it all, I discovered the importance of creating specific criteria and exit models. Even if creating these systems means you leave money on the table, be diligent, and stick to your systems. This is a more long-term mindset and a wise way to make calculated risks.
- Chase the Right Goals
I wanted to be a millionaire but when I became one, there was no fanfare, no one really cared; it was empty. Realizing this helped me take my foot off the gas. When I slowed down and thought more long-term, I was able to build better systems for sustainability and due diligence.
I also discovered that I wasn’t playing big enough in my goals. While I was flipping houses and saving money by being micro correct, larger investors were thinking more long-term and saving a lot more money on the macro level. It’s the same amount of work to flip one house as it is to flip an entire office building, so why not play bigger? Because I had the right systems, I could play bigger and set bigger goals.
- Listen to Others’ Advice
Before the crash that tanked my first million, I had other experts tell me the crash was coming. But all I could see was all the money I was making, so I didn’t believe them. I thought I was smarter than others because I was having success in this niche. If you want to make calculated risks, surround yourself with people you can learn from… and then learn from them! Learn from my mistakes and heed the advice of others who have been around for longer.
- Be Persistent
Persistence is key, especially in commercial construction. I had to be persistent to learn what I did, make the connections I have, and rebuild what I lost. If you’re just starting out and have no idea what other successful investors are talking about, dig in, get scrappy and learn wherever you can.
I can tell you firsthand how dramatic the consequences of making uncalculated investment risks can be. Even though I was really good at what I was doing, that wasn’t enough to keep me out of harm’s way. When you look at your life, if you’re planning to do this long-term, your decisions have to be about more than just maximizing profit in the short term. Put in the consistent work, create the systems, learn the industry from others who have gone before you, and update your goals as you go.
I spoke with my sister a few days ago, and we decided we’re interested in investing in real estate properties this year. We’re glad you described the importance of listening to others when they advise you about your commercial real estate investments, so I’ll make sure my sister reads this too. I appreciate your tips on taking calculated risks when investing in real estate.