There’s a perception that with real estate, one can never go wrong. Many people with spare money to invest fancy property because of its (perceived) hands-off approach when it comes to management. This enables them to engage in other activities while passively earning additional income from their property investments.
The sharp increase in the price of land has played the leading role in attracting Kenyans to real estate. Land is no longer viewed from the economic point of being a factor of production. Instead, people buy land which they do not develop but simply sit back and wait to sell later at handsome profits.
However, the practical aspect of trading in real estate is far less glorious than the theory.
Many people who enter real estate do so with a lot of zeal, but fail to build their investment portfolios past their first land purchase. You should be very cautious before entering the property sector, as it is not always as glamorous as it might seem on the surface.
So how have some people achieved tremendous success and become real estate magnates,while the majority of investors end up burning their fingers as soon as they dabble into the trade? When it comes to buying and selling real estate, what separates the wheat from the chaff? Find out the habits and qualities that propel novices to the top of the industry. Below are 10 tips that make for an effective real estate investor:
- Treat real estate as a career, not a hobby
For you to fully realise meaningful profits in the property market, you need to pursue it as a full-time career.
With real estate, there’s always a huge amount of money changing hands and this can never be treated casually. One also needs to sit in meetings with potential clients and handle endless negotiations. All these require a lot of time and cannot be treated as just a hobby.
- Develop a niche and know it well
According to experienced investors, people often fail in real estate because they enter the field when they are still not sure about what to specialise in. Consequently, they fumble about in the dark attempting to be Jacks of all trades, only to end up frustrated. Real estate, has several areas such as dealing in vacant land, wholesaling, real estate investment trusts (REITs) and flipping. A potential investor needs to carefully select one niche and pursue it. This will make it easy for one to gain in-depth knowledge of that particular field and hence help them to stay ahead of the competition.
- Don’t expect to get rich within a short time.
Many people looking to get into real estate nowadays have no patience to persevere and grow reputable businesses. They always want to start investing today and reap millions tomorrow, oblivious of the persistence that the industry requires.
People in the real estate sector are usually smart and can easily detect those in the game who are just looking to make a quick buck.
These are people who transact millions of shillings, they are not too dumb to notice that the person they’re dealing with has not done enough research in their field and would bolt if they detected, for instance, that you don’t even have a physical address.
- Develop good networks
All successful realtors build around themselves a network of high-value individuals in the industry. Realise that it is important for realtors to work together even though they are in competition with one another.
However you should not rush into partnering with a company before performing a thorough background search on it. It is important to conduct such a search to avoid getting into a partnership with a dubious organisations that can soil one’s reputation.
- Know when to consult professionals
Many people who venture into real estate initially want to do everything by themselves, without engaging professionals such as realtors, lawyers, property valuers and building contractors. This is usually in a bid to save costs, as the common perception among average investors is that professionals charge a lot for their services.
This perception could not be further from the truth, here is an example of a person looking to sell their home. If such a homeowner chooses to bypass professional realtors and decides to engage the potential buyers on their own, they not only risk being conned, but also selling the house at a price that’s far much lower than the current market prices. Further, the house might remain on the market for much longer because the seller misses out on the opportunity to advertise it to the realtor’s viable clientèle base.
- Be honest and ethical
One sore point by many real estate industry players is the high level of deceit when it comes to land dealings in the country. It seems con men have been having a field day selling land whose titles are either forged or non-existent. This has made Kenyans generally sceptical when it comes to trading in real estate.
When one joins the real estate field as an investor, opportunities to make an easy buck under the table will surely arise. Honesty is such a rare virtue in this field that the few who possess it quickly stand out as giants and market leaders.
High ethical standards are crucial ingredients for an prospective investor’s success.
Always put the customer’s interests first in all you dealings. This has helped investors retain clients for years. When you’re honest, word gets around fast and people keep referring new customers to you.
- Embrace technology
That technology evolves rapidly is common knowledge but it is up to the investor to adapt in tandem with the technological changes or let their business sink.
You stayed above the competition because you are always looking to infuse the latest technology into your operations. For instance, you could use a cloud-based system of management that can instantly be accessed anywhere by your agents, clients and home owners. Social media is another great opportunity.
- Develop good communication and negotiation skills
The property industry is all about communicating with potential clients and convincing them to sign along the dotted line. A deal relies heavily on the art of conversation, which is not usually an easy concept to grasp.
It’s important to asses people’s communication skills before entering into any business partnerships with them. Real estate is all about selling, and selling needs superb communication skills that sometimes cannot be learnt in school.
A realtor should have the ability to bring two opposing parties to the table and make them reach a common ground.
- Keep your emotions in check
A serious error many people make is buying property at inflated prices simply because they’ve “fallen in love” with it.
Make purchases based on facts and figures, not emotions.
Before one buys property, they should seek expert valuation and never pay a cent above the valuation price. When entering into a joint venture partnership with others, they should do so based on the other party’s competence in handling real estate matters as opposed to appeasing close friends and relatives. If possible, avoid getting into deals with close relatives.
- Keep yourself informed
In order to adapt to the ever-changing political landscape and economic trends, one needs to constantly keep abreast of new developments in real estate. Read property magazines and keep a finger current political happenings.
The decisions that politicians make always end up affecting the property sector in one way or the other.
Being constantly informed also helps one to keep up to date with national laws, county regulations and emerging trends.
Any aspiring real estate investor who closely follows the above-mentioned tips can achieve their goals faster.
All in all, the property scene is profitable for those who are willing to work hard, be diligent and seek as much knowledge as possible about the industry.