Maybe the rich are often successful because they have learned not to skimp on the basics. Many people who see real estate investing, for example, may harbor the misconception that successful people are just incredibly lucky or that they have been born with some innate talent for money and investing.
This just is not true.
What the rich do differently from other people, and what all successful property investors do, is prepare. The successful property investor does his or her homework.
“The ABCs of Property Investing” author Ken McElroy relates a story about a client of his that became a client only after making a complete and utter mess of his investment . McElroy and his company manage properties for investors. Ideally, an investor will hire a property management firm at the outset, rather than making an attempt to manage the property from a distance. That is what this guy tried to do. He soon realized that the time required to do such a thing was unreasonable.
This was not this investor's sole error. The owner had not even bothered to make a visit to the investment property before making the purchase, and as a result he hadn't the faintest idea it was filled with deadbeats and criminals. He had not bothered engaging a team of real estate investing experts who would have gladly told him to stay away from that neighborhood, due to its high crime . It was a bad place, and he should have avoided it. In fact, he could have avoided it very easily if had he only done his homework.
It is easy to imagine how much money he spent rehabilitating the property—funds he would have saved simply by budgeting for the experts he needed. It would have been impossible to fix the problem of the building's location, and therefore the property didn't have the potential to fetch top-dollar rent.
In nearly every case, the wise property owner cannot afford not to hire the experts.
Wealthy real estate investors also tend to have a staggering amount of focus. That's why they're rich. They decide on a target and hone in until they're zooming in on one piece of property. They already know what sort of investment property they want. In fact, they may specialize in hotels or apartment buildings or what have you. They constantly keep in mind the locations that they are interested in and the age range of buildings they are willing to look at.
In the event that their first choice of neighborhoods doesn't yield anything that appeals to them, they move on to the next best, and onwards, but they never lose track of what is and is not acceptable to them.
One important lesson that being rich teaches people is that money talks. They know you don't need to wait until a piece of property is put up for sale to purchase. If an interested party manages to take the owner by surprise, it is sometimes possible to get a great price on a piece of real estate that's not up for sale. And there are no competitors to outbid you.
The wealthy do appear to reside in another world. For them, funds are not scarce. They will not break a sweat in the event that a deal doesn't work out, because they know that there will always be others. Someone who is hoping to improve his life significantly by investing may be nervous about letting a deal get away.
McElroy says it is best to be detached, to work under the assumption that every negotiation will end with the buyer walking away from the deal. Most deals just are not deals, he says. The smart real estate investor understands that it is important not to get too attached to closing the deal.
The rich know this stuff, not because it is innate information, but because they have been educated on the subject, or else they've taken the time to educate themselves. Anybody can potentially invest as the rich do. It simply requires a commitment to learn.
