Ways to Think Like a Real Estate Investor


Real Estate investors have a unique way of looking at money that most people could benefit from. They look at properties differently than the average business owner or consumer. It’s this mindset that helps to create real estate moguls who seem to effortlessly create wealth. To think like a real estate investor like Donald Bren, Richard LeFrak, or Samuel Kooris, start looking at problems differently than you do now. Here are the ways you can start thinking like a real estate investor.

How Will This Investment Earn Me More Money?

Just knowing that something can earn you more money is not enough. You need to understand the how. How does the business work? What is the mechanism by which the business earns money? Is it through stocks and bonds? Do you earn by renting out units in buildings?

A good real estate investor can ask these critical questions to determine if they should invest or not. They aren’t swayed by shiny marketing. Instead, they look behind the curtain to see what’s really going on behind the scenes. It’s questions like this that help them decide if they should invest in beachfront property in Maui or high-rise apartments in Bangalore.

Will I Make Money Off This Investment One Time or is it Recurring?

Another aspect to consider when you’re thinking like an investor is which investments will make you a one-time lump sum and which ones will repay you for years to come. A simple example of how this works is with house flippers. Each time they buy and sell a property it’s a one-time transaction. Once the property is sold, they no longer make any money from that real estate.

If they were to instead turn that property into a rental unit, they could make money every single month as long as they have tenants. On a larger scale, this can apply to land acquisition or when investors buy property in cities. For Samuel Kooris, Brooklyn investments offer options for both. By purchasing buildings and revamping them, he could choose to rent out units or resell to another investor.

What Will Happen to My Investments if the Market Slumps?

Real estate investors know that there is a natural ebb and flow of property investments. There are times when the market is great for investing, and others when they need to pull back. There are times when commercial real estate will be in high demand and others, like during a recession when new businesses won’t be booming, and those storefronts might sit empty. It’s critical to know what will happen in those situations when the market is down.

Consider Opportunities to Help You Grow

Investors don’t think like normal 9-5 workers. They aren’t waiting for their annual review to earn more money. They don’t look at their bank accounts as fixed forever. Instead, they are proactively seeking out opportunities to grow them and their income. This means that they think critically about current real estate investments and whether there is a way to make more money on them or not.

Understand the Distinction Between Assets and Liabilities

Assets will make you more money, while liabilities will cost you more than you get back. A house mortgage can be an investment, a car loan is a liability. If you can find ways to turn a liability into an asset, then you’re on your way to thinking like a real estate investor. They find ways to spend some money on liabilities they enjoy while also balancing the need to have a portfolio filled with assets that constantly make them money.

They Know How to Delay Gratification

Just because you want something doesn’t mean you need to buy it now. Investors know how to wait. Sometimes they wait on buying new properties until one they already have is turning a profit. They then use those profits to invest in additional real estate. Other times they wait on investing in an area until the right timing. It took a while before Alchemy Ventures and other investment firms decided to develop certain areas of Brooklyn. They needed to see that their money would not go to waste and that it would yield them more money in the long run than they put in.

Compare listings