With the new year upon us, it is important to remember that setting goals should be a task performed regularly, no matter if you’re new to investing or have years of experience.
The problem with many goals, however, is that they are often forgotten as quickly as they are created. That’s why investors must be very specific about investment goals and plan the exact steps required to achieve them.
In our final article of 2021, we want to help you understand how can you go about setting your investment goals for real estate and list the several things to keep in mind before putting them on paper.
SMART investment goals for 2022
“SMART” is an acronym for Specific, Measurable, Attainable, Relevant, and Time-bound goals, and it has proven to be a useful technique for creating financial commitments. SMART goals enable investors to leverage their resources and time productively, creating more focused efforts overall.
This methodology is commonly used by businesses and individuals to identify actionable goals and set achievement deadlines. Rather than working aimlessly, creating SMART investment goals can help you zero in on your target while simultaneously carving out the optimal path to achieve it.
An essential element of this technique is creating a time frame for each objective. It is a good idea for investors to create short-term goals that lead up to their main goals for the year.
For example, as you think about your long-term financial resolutions, look for incremental habits you can implement throughout the year to ensure you get there. One way to do this is by breaking down each goal into different terms: three months, six months, and year-end goals.
Before setting investment goals…
It is important to understand that goal setting will look different for every investor. While there are financial tips that can be applied to everyone, the specifics will be entirely up to you. At the end of the day, your ability to set goals will come down to your individual preferences and market area. Here are six factors to consider when planning your real estate goals:
- Conduct a thorough market analysis to determine the right investments for you.
- Assess which investing niche aligns with your goals and market.
- Determine your ideal time commitment when it comes to investing.
- Ask what type of returns you are looking for.
- Strategize which marketing strategies will help you achieve your investing goals.
- Review your financial situation and whether or not you will need access to alternate funding.
Perform a comprehensive market analysis
The first component to developing real estate goals is a strong comprehension of your market, which will require doing your homework. You must conduct a market analysis to identify an opportunity, as well as trends and changes that are occurring.
Investors should also look at factors like median home price, appreciation rates, gains in total home equity, home affordability, the health of the local economy, and new housing construction. Doing so will provide a snapshot of where the market stands and how you can add value as an investor.
This information will not only assist in forming your goals but also detail where you should invest and how. To learn more about completing a thorough market analysis, be sure to read this article.
Select the right niche
Because there are endless investment avenues within real estate, it’s critical to identify a starting point. Finding your real estate niche will not only help refine your approach moving forward, but it will assist in distinguishing yourself from the competition. The right real estate niche will guide your investment strategy and therefore, all of your wealth-building goals.
Some tips for discovering your real estate niche include defining your purpose, identifying what you’re good at (and what you enjoy most), understanding how you can add value, and uncovering the needs of your market area. Instead of focusing on the best investments for 2022, consider how identifying the right niche can help you find success in the new year.
Figure out how much time you can commit
Another important factor to think about when setting real estate goals is time. How much of your time do you want to dedicate to investing in real estate? Better yet, how much time do you have available to focus on real estate? Identifying availability will help investors align their efforts with the right investment goals.
For example, rehabbing houses can take investors a significant amount of time to complete from start to finish. While this strategy may be right for some, investors who are hard-pressed for time may find better luck with alternate investment goals such as wholesaling or REIT investing.
Examine your profitability options
Profitability is the name of the game for a real estate investor. However, every investment avenue will differ, including the average potential profits, it will produce. Investors must examine the exact dollar amount they’re seeking to obtain with their investment business.
Similar to determining the amount of time you’ll dedicate to real estate, it’s essential to calculate the profitability you want to make from various real estate investment deals.
The best advantage real estate has to offer over other investment opportunities is the freedom of choice. From rental properties to house flipping, the type of income you wish to earn will be dependent on your investment vehicle.
If you’re looking to earn residual income, your approach to investing will differ from those seeking to obtain one large lump sum. Investors’ preferred level of profitability can help shape your investment goals throughout the year.
Set in place a marketing strategy
This is important for a variety of reasons; most notably, marketing encompasses a combination of time, money, and strategy. To transform a business from an idea into reality, investors will have to rely on different marketing strategies.
The reason it is important to review your existing marketing when setting investment goals is that the success of your marketing has a direct impact on the success of a business. By evaluating old marketing strategies and surveying the industry for new ideas, investors can determine which of their efforts should carry into 2022.
Regardless of the strategy you choose to pursue, it is important to continually monitor the success of all marketing efforts and be prepared to make adjustments.
Review your finances
Lastly, you’ll want to examine your financial situation before setting real estate goals. This will ultimately dictate your approach moving forward, including whether or not the assistance of additional financial backing will be needed.
If what you’re seeking from real estate is unattainable with your current financial situation, the need to locate a partner or develop a joint venture may be necessary. The use of a self-directed IRA may also be required. The collaboration of resources and talents can be beneficial for investors, especially those lacking the monetary means to get started on their own.
Use your current finances as a guide when determining your investment goals for the year ahead. Doing so will ensure you are ready for any opportunity that comes your way.
The bottom line
As a real estate investor, entrepreneur, or business owner, the importance of setting goals is undeniable. Investors should consider a variety of factors when creating financial goals for the year ahead, and they should be careful to think in terms of action.
The well-known psychologist and author Carl Jung once said, “You are what you do, not what you say you’ll do.” Remember, success as an investor will not be found in investment goals alone, but in the habitual effort to achieve them.