With the new year approaching, people are starting to list their resolutions and goals. And real estate investors are no different. Setting real estate goals early on is one of the most important things you can do in your planning process. Successful real estate investors are able to set goals in a real estate business plan and achieve them.
What Are SMART Real Estate Goals?
Yes, intelligent, but that’s not the smart we’re talking about. If you want to know how to set real estate goals, then you should know all about SMART goals.
SMART goals refer to goals which are:
- Specific
- Measurable
- Attainable
- Relevant
- Time-Bound
Say one of your goals is to increase profits. A SMART goal would be to “increase profits by $10,000, using cost-cutting methods and improving real estate marketing”, as opposed to just “increase profits”. The SMARTer the goal, the easier it is for you to evaluate your success.
So what are some real estate goals you should pursue? Consider the following:
Continuing to Learn
One of the first things you should do when you start your real estate career is to research and learn about all things real estate. You begin by understanding general housing market trends, and then move on to more detailed real estate analytics. This doesn’t stop, even if you become an expert in real estate. Real estate trends are constantly changing, and so are economic factors, and real estate laws and regulations. If you don’t stay up to date, you can risk missing out on important information that could risk your investment. So always continue to research and stay up to date. Check out our knowledge center for the latest real estate news and resources available for beginner and expert real estate investors.
Increasing Profits and Building Wealth
This is quite an obvious one. You should plan to increase rental income in order to increase positive cash flow. You can do this by buying multiple rental properties in a single year, by cutting down on costs and expenses, and by increasing rental income (within reason) from your current investment properties. Let’s explore these options a bit further.
A simple profit formula will tell you that profit = revenue – expenses. So the two obvious ways to increase profit in real estate are increasing revenue or decreasing expenses. You can increase your revenue by increasing rental income – and yes, that is something you can do. If you’re worried about pissing off or losing tenants, then read this guide: Raising Rent Without Losing Tenants: 6 Tips for New Landlords.
The other way to increase your real estate profit is by cutting down on your expenses. You know there are things you could spare doing, we all do. And sometimes, one needs to boot-strap in order to achieve the highest profit possible and to build wealth. List all your expenses, and cut down the unnecessary ones. Your savings account will thank you later.
The final option is to buy more rental properties. Investing in more than one rental property is definitely a challenge, but it is one that will yield revenue. So once you’ve secured your first investment property, start looking into the next one. Check out this guide on How to Buy Multiple Rental Properties in 2020 to learn how to do this. This will, in turn, help you achieve the next real estate goal on our list…
Related: 8 Simple Steps to Building Wealth with Real Estate
Diversifying Your Investment Portfolio
This should be another one of your real estate goals. One of the first things I learned in Finance is that it’s very important to diversify your investment portfolio. And things are no different in real estate. Diversifying your real estate portfolio means that, as an investor, you should attempt to invest in different types of investment properties and in different real estate markets. If you’re investing in an Airbnb rental property in Seattle, diversifying would mean exploring the wider Washington State market (or further), and looking into different real estate investing strategies, such as traditional investments.
Does this bear more risk? Quite the opposite. Ever heard “don’t put all of your resources in one place”? Diversifying your real estate investing portfolio means that your risk is divided upon different “projects”. And if something was to negatively affect the Seattle Airbnb market, you wouldn’t be jeopardizing your entire portfolio.
Investing in New Tools for Your Real Estate Business
In order to achieve the last two goals on our list (making more money and diversification), you’ll probably need to buy another investment property. Not just any property will do. You’ll need one with a high return on investment (ROI). And if you want to ensure that you can look back at the end of the year, satisfied that you reached your goals, you’re going to need the right real estate investment tools!
Try using Mashvisor to buy your next investment property. Plug in the city or neighborhood of choice into our search bar, and gain access to a wide range of real estate data such as cash on cash (CoC) return, cap rate, expected rental income for traditional and Airbnb properties, and real estate comps through our rental property calculator.
Click here to sign up for Mashvisor now and subscribe to our services with a 40% discount.
Related: How to Find a Good Rental Property for Investment
Growing Your Real Estate Network
You need to be well connected regardless of the industry or business you’re in. And when it comes to real estate, your network is crucial to your success as an investor. After all, real estate is a people business. Whatever real estate strategy you follow, you’ll end up dealing with and handling other people.
Your real estate network includes anyone from investors, lawyers, real estate agents, accountants, buyers, and sellers. It’s also smart to grow your network beyond the real estate industry. One of your real estate goals should be to include researchers, demographic analysts, economists, and tourism experts in your network – all of whom should know about other industries and areas which affect real estate. Again, following our above example, assume you own an Airbnb investment property in Seattle. Your tourism contact can inform you that tourist numbers are expected to fall. You can plan ahead, and act accordingly.
Your network can thus help you gain more experience in real estate (among other industries), and aid you in finding investment property, tenants, buyers, among other opportunities. There’s always someone to learn from and to benefit from.
Related: How to Build a Real Estate Network You Can Really Rely On
Finally, remember that the above real estate goals are general, but that you need to adapt them to be SMART goals so you can evaluate whether or not you were able to meet them, and to know how to improve in the future to achieve success in real estate.
What are your real estate goals? Let us know in the comments below!