A Data-Driven Approach – How to Tackle Real Estate Learning Curves The Right Way

If you’re in the real estate industry, you’ll know the importance of continuous learning. Even long-term real estate investors are constantly learning new things and engaging with new challenges as they are exposed to different markets. There is a learning curve often associated with real estate, whether you’re studying to become a real estate agent or exploring your potential as a real estate investor.

It’s easy to get distracted by the growing amount of real estate content online. You’ll find seminars, courses, and video content across social media. Like any industry, it’s essential to consider what and how you’re learning.  

Getting familiar with the real estate industry can feel like an uphill battle, but it doesn’t have to be. It’s important to start by learning proven real estate investment strategies as an educational foundation. Focusing on these basics can help you avoid getting too overwhelmed. 

We’ve outlined six simple principles to help you tackle the real estate learning curve the right way so that you can efficiently implement them into your real estate investing plan. 

Real Estate Investing: Start Slow, Build Steady

It’s easy to be tempted to by get-rich-quick schemes and want to dive head-first into real estate investing, but the most successful investors are those who take the time to do their research and become familiar with the industry and the market they are interested in investing in. You wouldn’t buy a new car without taking it for a test drive first, would you?

The first step to real estate investing is to start slow and build steadily. Research your local neighborhood or the market you’re entering.  Platforms like Privy,  Zillow, and Realtor.com will give you lots of resources, including property listings, mortgage data, and helpful guides to school districts and demographics. Real estate software like these helps investors understand the real estate market and current housing market trends. 

Knowledge is power, and you can always learn something new about real estate, even if you’ve invested previously or worked within the real estate industry in some capacity. The learning curve is why most would-be investors remain sitting on the fence and never take the plunge. The more you leverage the powerful technology available the more powerful you will be. 

Privy uniquely leverages real-time transactional data from successful investors and applies proven strategies to identify profitable investment opportunities across the United States. Exploring platforms like Privy can help you become more familiar with industry lingo and more confident conducting proper property analysis. 

One strategy for small-scale real estate investors is to start by renting out a property they’ve lived in, usually after purchasing another home. It’s a great way to generate passive income and grow your investment portfolio.

Educational Resources for Real Estate Investors

Not everyone starts their real estate investment journey with the same knowledge and experience. Online resources like Udemy and Coursera give you access to virtual classes on various real estate topics. 

Develop your knowledge of property management or improve your understanding of financial modeling. Coursera hosts classes offered by over 300 leading universities and companies, including classes that offer certifications. If you’re just starting in real estate, Udemy is a beginner-friendly platform and online learning marketplace with hundreds of courses on real estate investing. 

You don’t have to sign up for a course or pay for a virtual seminar. Dozens of online platforms provide news and coverage on the latest real estate trends, from mortgage rates to interior design trends. Sign up for websites like Housing Wire, BiggerPockets, and Inman, and read the latest industry news articles over your morning coffee.

Check out our “How Do I Become a Successful Real Estate Investor?” guide for more insights into how to set your investing journey up for success.   

Get Comfortable with Numbers and Stats

Believe it our not, you don’t need to be a math wizard to navigate cash flow calculations and profit margins. Most of the core calculations involved in real estate investing are simple math. Once you understand their core concept, you must manage your financials to meet these numbers. 

Getting comfortable with numbers can inform your decision-making and give you better market insights. For example, understanding the 1% and 50% rule for cash flow makes it easy to quickly determine whether a potential property is worth considering. 

Get familiar with reading mortgage amortization charts and data-driven articles on topics like rental property depreciations. Privy’sblog offers in-depth advice on the most common stats and analysis, such as sales comparison approach (SCA) to facilitate comparative market analysis (CMA). 

These numbers will quickly become intuitive as you start to learn how they influence decision-making. You don’t need to be good at mental math or algebra to apply numerical data to your real estate investments.

The real estate market is constantly evolving, and you need to stay alert to market trends and changes. Getting comfortable with numbers makes it easier to keep on top of these changes. Embrace the idea of continuous learning and explore opportunities to find out more by attending in-person seminars, virtual courses, or reading online guides.

Separate Your Emotions 

One of the best lessons you can learn about real estate is to separate your emotions. When you see a property for the first time, avoid getting caught up in your own reaction. Don’t judge a property by how it currently looks. Instead, think of its wider potential. It’s easy to get caught up in small features like squeaking doors or aesthetics. 

Keep emotions out and consider a property by crunching the numbers. You’re not choosing a property to live in. You’re buying a property as a financial asset. Many first-time real estate investors make the mistake of overvaluing or undervaluing a property based on their own emotional reaction to it.

A data-driven approach is the key to tackling the learning curve of real estate. While your gut instinct is important, data will help guide your investment strategy and give you a sense of the wider picture. A property might look pretty in pictures, but its current valuation may make it impossible to follow the 1% rule if the local market has low demand and high vacancy rates.

Check out our in-depth “Mastering Real Estate Investing: The 1% and 2% Rules” guide with detailed advice on practical considerations and how to apply these calculations. 

Keep a focus on the data and avoid getting caught up on things like window dressing. Properties are staged to make them sell. Cut out the noise and crunch the data to ensure you’re not overpaying for a property. Overpaying will make it more difficult to create a positive cash flow. 

Emotional mistakes to avoid when investing:

First-time investors are at higher risk of making emotional mistakes. Investing in your hard-earned money makes it easy to get attached to your investment. One of the biggest mistakes you can make is to treat the purchase of an investment property like buying your own home. 

If you feel yourself becoming emotionally attached to a property, it’s a good idea to put some distance between yourself and the investment. Reach out for independent advice from a buyer’s agent, financial planner, or conveyancer. They can advise you on the property’s investment potential and whether it aligns with your long-term investing goals. This type of due diligence can be expensive, but it gives you peace of mind and provides a learning experience. 

If you’re purchasing a property at auction, it’s important to plan ahead. Property auctions are fast-paced and it’s easy to get caught up in the emotion of it all. Overbidding happens and investors often find themselves paying substantially more than they had expected. As a rule, most sellers want around 20% more than the advertised guide price. Decide your bidding strategy before the auction and set a hard limit on how much you’re willing to pay.

Get on Top of Data By Networking

Networking is crucial in real estate. The people you work with – from bankers to property appraisers, attorneys, and bankers – provide valuable insights as data sources to help you understand the local market.

Prioritize building relationships with trustworthy professionals. These relationships will provide you with more accurate data sources outside of your own research and technology. Explore different networking opportunities and don’t limit yourself strictly to professionals within the real estate industry. Local business owners can provide other valuable insights. 

A data-driven approach to investing is important because it leads to more informed and profitable investment opportunities. Staying on top of data and gaining insights from your wider network can help investors develop better risk assessment skills and implement mitigation strategies. 

Networking is something you can start working on before purchasing your first investment property. Strive to have meaningful conversations to learn from the perspectives of other professionals within the industry. These lessons can help inform your decisions and you may be able to find a mentor or peers who can offer support throughout the investing process.

You can tackle the learning curve of real estate by gaining valuable resources through networking. Build connections with other investors and reach out to stakeholders who can offer specialist advice, like real estate attorneys and contractors. They can offer you access to resources and information that might not be readily available online.

Don’t Get Caught Up in the Hype

Focus on the numbers, ignore the hype. It’s easy to open social media and see other investors flipping their first house or generating six figures every month from their rental portfolio. Social media is a highlight reel and influencers often stage scenarios to make them look easier or more lucrative than they are. Don’t imitate others, especially real estate investors who double as influencers. Use your own data, do your own research, and pave your own path. 

Getting caught up in the hype is an emotional mistake many investors make. It’s easy to listen to influences and even mainstream media who create the perception that you must start investing today. Getting into the industry too quickly can lead to poor decision-making and cost you more money in the long run. Don’t let the fear of missing out overtake the need to familiarize yourself with the real estate industry.

There will always be opportunities to invest in real estate. While there are always optimal times to invest, it’s important you take the journey at your own speed. Investing in real estate without data insights is like fighting with one hand tied behind your back.

Real estate data and analytics help you set realistic pricing, understand the industry, and develop a long-term strategy. Investors who prioritize data earn higher revenue and have faster sales with lower vacancy rates. You’ll be a more efficient investor if you spend the time understanding how the real estate market works and familiarizing yourself with the most important data points. Real estate technology, like Privy, means you can get most of this information at the touch of a button. 

Trust the Numbers and Value Experience

Real estate technology is evolving at lightning speed. New tools and updates are constantly hitting the market, giving you even more insights and knowledge into the real estate industry.

Privy gathers all this data and crunches the number to make it easy to understand. You get all the accurate, critical data you need to inform every stage of your decision-making process. You’ll get access to information that is often hidden deep in the depths of multiple listing services (MLS). 

Instead of spending time and resources getting this information from agents or local market experts, you can get instant access through Privy. The easy-to-navigate user interface gives you an overview of local market trends with maps showcasing property value and neighborhood information. Other information includes insights into property improvements and their impact on valuation. 

Collaboration is important in any industry but as a new investor, it’s crucial you draw on the experience of those around you. Grow your network, but as a new investor, it’s crucial that you draw on the experiences and don’t be afraid to reach out for help. Creating partnerships with real estate agents, contractors, mortgage lenders, and property management companies can help you gain vital insights and develop opportunities for the future.