If you’ve been taking the time to educate yourself as a real estate investor, you have a pretty good idea of what you need in order to build a successful business. It takes more than just knowing what to do. Before you begin investing you need to answer a really important question: What kinds of clients are you looking for? Targeting your market sharpens your focus and makes it more likely you’ll hit the bulls-eye.
What is a target market?
In the real estate investment business, a target market refers to the types of sellers you want to work with and the types of properties you want to invest in. Creating a specific profile for both will help you do that.
To illustrate this concept, let’s use the example of investing in distressed properties. Investing in distressed properties is a stand-alone niche of real estate investing. It’s different than investing in brand new homes or tax defaulted properties, but in order to be most successful, you should niche deeper.
Instead of just seeking out distressed investment properties anywhere and everywhere, you could focus on distressed properties in one of the following:
1) Low-end neighborhoods.
2) Middle-income neighborhoods.
3) High-end neighborhoods.
Each scenario is different.
How do you choose a niche?
In the beginning, you might flail around a bit until you find a niche that works with the goals you set for your business. Goal setting is the foundation of your business. Knowing your goals will help you define a target market and how to best reach them. If you don’t know what you want, some of your efforts will be wasted and your energy will be spread in too many directions. Don’t move forward without a plan.
Some novice investors assume that target marketing will diminish success by limiting the number of opportunities. In fact, it does just the opposite. If you pounce on every opportunity that comes along, you’ll never master anything. Target marketing makes you an expert. It allows you to practice and perfect your skills so you can become a specialist in your area of expertise. By concentrating on your target market, you strengthen your capacity to excel.
Choosing a specific market will depend on several factors. Do you enjoy a challenge? You might seek out dilapidated properties in older neighborhoods. Although there is a lot of work involved, the rewards are many. Personal satisfaction is one, and the return on investment (ROI) is high.
If you don’t like to get your hands dirty, you might prefer a turnkey operation. Your ideal client might be the seller of a higher-end home requiring nothing more than a few cosmetic touch ups.
Do you see the value of being specific? Know what you want. Targeting your market will save you time and money. If you’re doing something you love, it will also bring you more joy as you grow your business.