Industry estimates suggest that investors accounted for nearly 30% of all residential home purchases in 2012, and will continue to be a major part of real estate sales in 2013.
One of the biggest benefits to working with investors is that successful investors buy and sell multiple properties over the course of a year - and will often work with the same real estate professional on all of these deals. Working with a relatively small investor who buys and sells just six properties a year - means 12 "sides" in 12 months. A good agent will be able to leverage those deals into more deals, just by working with the buyers who purchase the investor properties. What this means is a steady stream of income without the marketing costs usually associated with customer acquisition.
So how can you be one of those savvy, successful agents? I'm glad you asked!
Four Tips for Working With Investors
1. Learn the Language
Investors speak an entirely different dialect than the average homebuyer. They discuss things like cap rates (which are not hat sizes, in case you're wondering), cash-on-cash returns and net present value. You don't need to be an expert on these terms in order to work with investors, but you should be conversant. Investopedia.com is an easy-to-use website with plain English definitions and explanations of all sorts of investor lingo.
2. Be an Insider
There are hundreds of real estate investor groups across the country. Most of these groups welcome real estate professionals as members. Joining one of these groups is a great way to find prospective clients, and to learn what investors in your area are looking for. You can find local groups on websites such as REIclub.com and NationalREIA.com or by simply doing a Google search for real estate investing groups in your city. The website BiggerPockets.com also has useful information for agents who want to work with investors.
3. Understand the Objectives
Unlike traditional homebuyers, investors aren't looking for places to live or to raise their families - they're looking for properties they can use to make a profit. So your approach to securing their business shouldn't be the same as your pitch to those traditional buyers and sellers. You need to understand your client's investment strategy: Buy, fix and flip? Buy at wholesale and sell to another investor? Buy, rehab and rent? And you need to know the investment horizon: Is this a long-term hold with a 5-7 year profit window, or does the investor need to sell this property before buying the next one? The more you know about your investor's objectives, the more useful you can be in tailoring your efforts to help achieve them.
4. Do Your Homework
Once you understand the objectives, your skills as a local market expert come into play. Where are the best rental opportunities? Which neighborhoods are "hot" right now for sales? Where are new jobs being created or new schools being built? Help identify those opportunities, and present properties for your investor to consider purchasing to take advantage of market conditions.
Learn how to work with real estate investors in your area, and watch your business prosper in 2013!