Working with investors can be an extremely lucrative niche for real estate agents. When you find the right investors, you’ll often be able to sell them multiple properties per year and may also enjoy perks like cash offers and fast closings. As long as you’re willing to develop certain skills and follow a few best practices, this can be a great way to jump-start your real estate career or take your business to the next level.
Here’s a look at some of the most important things you need to do before you start working with experienced real estate investors.
1. Polish Up Your Math Skills
If you want to work with investors, you need to learn the terminology. It's critical to understand terms like internal rate of return, cap rate, and hurdle rate. Make sure you understand how to perform necessary calculations and that your knowledge of real estate math goes beyond punching numbers into a mortgage calculator.
It’s also important that you have a solid understanding of how 1031 exchanges work. Since these transactions can be quite complex, it's a great idea to get to know some tax and financial professionals who are well-versed in the topic. This way, you'll be able to reach out for guidance when it's needed.
2. Become an Expert in Your Market
When it comes to attracting real estate investors, you also need in-depth, expert-level knowledge about your local market and sub-markets. Not only must you have a solid grasp on the big picture, but you’ll need to be “in the know” about upcoming development projects, zone ordinance changes, and more.
3. Find Great Deals
Real estate investors expect their agents to be able to spot a good deal when they see one. Most are looking to buy properties that are priced below market value and they want an agent who can find undervalued deals that aren’t already listed on Zillow or the MLS. You’ll need to know how to find off-market properties like vacant homes and those that are part of an estate or are in pre-foreclosure.
Beware of sending investors deals or properties that don’t make sense. Not only will it waste both their time and yours, but it’s also a good way to ruin your chances for future opportunities.
4. Help Protect Investors from Themselves
While many real estate investors are quite confident, it’s still your job to offer guidance. Keep this in mind and always be prepared to help them avoid common mistakes. This includes overpaying for properties, underestimating the cost and effort of potential repairs, and over-inflating the after-repair value (ARV). If you notice any potential red flags, be sure to point them out early in the process.
You can also offer additional value by brushing up on your renovation knowledge and knowing what appraisers look for. This can help you make recommendations that can ultimately help the client maximize their return on investment (ROI).
5. Consider Offering Additional Services
Many investor-friendly real estate agents also offer property management services. Not only can this be a major asset to investors who don’t want to get bogged down in the day-to-day obligations that come with owning rental properties, but it also gives you another advantage. If you’re working with multiple landlords, you’ll likely be the first to know when one of them is ready to buy or sell.
Ready to Make Your Move?
If you’ve been thinking about a career in real estate, now is a great time to get started. Aceable offers pre-license courses that you can take online from the comfort of your home. Take a look today!