Five Goal-Setting Tips To Real Estate Investing Success In 2018
In the SMART system, goals must be specific, measurable, attainable, reasonable and timed. Using the SMART technique can help any investor narrow their focus and get the most out of their real estate investments.
Goals Must Be Specific
The term real estate investing covers a wide range of investing styles (fix and flip, wholesale, turnkey investing) and real estate types (single-family, multi-family, commercial). Creating specific goals can help an investor stay on course among myriad potential pathways. Here are some specific ways to go about real estate goal-setting:
Non-specific goal: “I want to make money investing in real estate.” This goal provides no direction about how or where money will be made.
Specific goal: “I want to purchase 10 single-family rental properties in the next 36 months that generate enough cash flow to replace my current annual income.” This goal is specific, and it provides a timeline of when it will be achieved.
Goals Must Be Measurable
It goes without saying: Everyone wants to make money on an investment. Investors don’t invest to lose money. A measurable goal is something that can be quantified, like a specific number of properties that will be purchased or the return on investment that an investor expects.
Unmeasurable goal: “I want to be the top real estate investor in my area.” This goal is unmeasurable because it doesn’t really mean anything. A top investor could be the one who closes the most deals or the one who has the most monthly income.
Measurable goal: “I want to purchase four investment properties with a 6% or higher annual rate of return on investment.” While this may seem so simple, that is the beauty of a measurable goal. The point is to have a benchmark to measure against. When an investor sets their goals, they can easily check to see if they are on track or not.
If goals aren’t measurable, they simply can’t be met. Setting a goal that can’t be measured is just like setting an unreasonable and unattainable goal: It does more harm than good.
Goals Must Be Attainable
Ambition is every real estate investor’s friend. It’s the trait that drives an entrepreneur to be successful. But real estate investors need to remember to keep their goals within reach. Creating unattainable goals only sets an investor up for certain failure that may hinder their desire to try again in the future.
Unattainable goal: “I want to make $100,000 on my first real estate deal.” While it is possible to make $100,000 on a real estate transaction, it’s not always attainable — especially for a first-time investor. Factors like market demand or properties available can impact this goal. Focusing simply on “the big number” should not be a part of real estate goal-setting.
Attainable goal: “I want to secure a property with positive cash flow and potential for appreciation.” This is an attainable goal because an investor can control where they buy and the price they pay.
Goals Must Be Realistic
Goals can hurt an investor when they aren’t realistic. Unrealistic goals are a lot like unattainable goals. However, an unrealistic goal goes beyond “out of reach” and into “impossible” territory.
Unrealistic goal: “I want to manage all my rental properties and fix-and-flips to cut down on costs, all while working a full-time day job.” No matter how motivated a real estate investor is, they can’t add more hours to the day. This goal — attempting to build a real estate investing business with no outside support — simply isn’t realistic.
Realistic goal: “I want to maximize my profits through partnering with the best team of property managers.” It is still possible to achieve positive cash flow while working with a property manager. If the numbers add up, an investor can still realize positive cash flow while outsourcing the day-to-day work to a property manager.
When taking part in real estate goal-setting, a reasonable investor should take inventory of their resources and set goals that correspond to the time and money they have on hand.
Goals Must Be Timed
Many real estate investors work for themselves, so timing goals is critical. By setting timed check-ins, investors can ensure they are meeting their goals.
Untimed goal: “I want to call as many leads as possible.” This goal isn’t timed because there is no end date. Is this a daily goal, a weekly goal, a lifetime goal? In addition to not being timed, this goal is also unmeasurable.
Timed goal: “By the end of the month I want to call 20 leads.” This goal gets points for being both timed and measurable. Setting a monthly quota for leads is an excellent way to parcel out all the work that goes along with investing in real estate.
Timed goals are especially important for investors who work in teams. They add structure to the dynamic world of real estate investing. Many investors jump into real estate investing with the long-term goal of financial stability and independence, and timed goals offer a roadmap to achieve that goal.
Goal-Setting For Real Estate Investing Success
Taking the time for real estate goal-setting can feel tedious, but it is crucial to being successful. The process of goal-setting is only the first step for a real estate investor to begin making headway. Once goals are set, investors need to develop a strategy to accomplish their goals. Build on from here with the next step of creating a business plan to keep your investment goals on track.
Source: forbes.com
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