Tips for Working With Investors in Real Estate
Jacqueline Kyo Thomas
When you work in real estate, every person you meet is a potential client. But, as you may already know, not all clients offer the same revenue potential. When it comes to the most lucrative client an agent can hope for, a real estate investor is likely at the top of the list.
Although they come in all sorts—some investors are interested in commercial, some in residential, others in industrial, and others still in land—and they have different budgets, ranging from flipping a single house to buying a city block, all investors have one thing in common: They have money to spend and are looking for your expertise.
Should you work with investors and, if so, what’s the best way to do so?
In this guide, we’re sharing top tips for finding and working with real estate investors as clients.
Before we discuss how to work with real estate investors, let’s explore the multiple benefits of working with real estate investors.
We’ve already teased this in the intro. One of the biggest reasons to work with real estate investors is that you have the potential to make a ton of money in terms of commissions. You may not make a lot from the sale of one property. However, most real estate investors are looking to buy and sell more than one property. If you become the go-to agent for that investor, you will have uncapped revenue potential. The more properties they buy and sell, the more you will earn from that one relationship.
When you begin working with a real estate investor, you have the opportunity to establish a professional relationship of trust. This relationship will serve you over the long term. Not only can you go deep in your relationship with that investor, but they will likely refer other real estate investors to you as well.
Being able to secure a real estate investor as a long-term client will make a huge impact on the future success of your business. Your investor client may be able to offer you a steady stream of work. Because you'll be so busy with your real estate investor client, there will be no need for you to go on the hunt for other clients. This provides job security and reduces the constant anxiety of finding the next client.
Now, let’s shift our discussion into becoming the type of agent that investors want to work with.
Finding investors is a lot like finding any other type of real estate client: You've got to put your name out there and inform everyone you meet that you're an agent who's looking for investor clients. Don't skip over that last step. It's essential that you position yourself as a real estate investor's agent. If you want to specialize in this, it must become part of your branding.
Brand yourself by putting this information everywhere: Your business cards, direct mailers, your website, and your social media. Make it part of your opening whenever you're introducing yourself.
The next step is to get certified. This step is optional, but a good idea to show that you're serious.
The National Association of REALTORS® offers a real estate investing certification program for member agents who want to know the ins and outs of working with investors. This course covers 1031 exchanges, REITS, NOI models, and more. Although it's not essential that you do so, becoming certified in this course can separate you from other agents and give you another reason to engage your followers on social media. Plus, the certification proves that you’re knowledgeable in the area of real estate investing.
Learn more about the National Association of REALTORS® real estate investing certification course here.
Once you’ve earned a real estate investor as a client, here’s how to maintain your relationship:
As mentioned above, there are different types of real estate investors. For this reason, you must specialize in two ways:
First, specialize in terms of your niche. For example, are you focused on residential or commercial? If residential, are you focused on single-dwelling units, vacation rentals, or luxury condos?
Next, focus on your market. Become the expert in what sells in your market. And also know why it sells. If you want to become an expert, you must understand the what, when, where, why, and how of your local real estate market.
Know about the future of the area, and not just the area’s past. Learn about major developments that may be in the works or major employers that may be moving to the area. Be able to know and predict trends in your neighborhood or micro-market. This information can impact your investor client’s future profitability.
You should also know all about the real estate rules, regulations, and zoning for your area.
Finally, consider educating yourself on the landscape of real estate investment. In this post, we share several books that focus on real estate investing. Grab a couple of these books (or listen to the audiobook versions) so that you can familiarize yourself with the real estate investor’s mindset. These books will cover the terminology of investing and what investors may be looking for in a property versus a standard buyer.
When working with an investor, be willing to defend your position with facts and passion. The first person you'll need to sell on the possibilities of the property is your investor. They need to catch your vision, but they also need to trust that you've looked at the data, researched the area, and know that the property can produce what they’re hoping to accomplish.
As a real estate agent, you already know your way around a calculator, but you'll need to get even more comfortable with a calculator if you want to work with investors.
Your investor client will want answers to potential returns they can make on the property. If they're looking to rent, this may include information such as return on investment and cap rate. You'll need to give them solid numbers on how much they can expect to generate from a rental property.
Investors may underestimate the cost of repairs or overpay for a property and cut themselves out of a profit.
In addition to being an expert in your field, it's also key that you be an advisor to your real estate investor. Some may know how it all works after many hard-earned lessons, but other investors are still learning with each property they buy and sell. It's your job to steer them clear of potential disasters, or at least give them the full report so that they can go in prepared.
Don't be so anxious to make the sale that you unintentionally overlook a potential money pit. This could jeopardize the future of your relationship with your investor client.
You've got to start somewhere, but once you've earned one investor, use that as leverage to become the go-to agent for other investors. Adding more investors to your network will only enhance your success as an agent.
For example, if you work with multiple investors, you may be able to let one of your investor clients know about an off-market property that another one of your investor clients is planning to sell but hasn’t listed yet.
The more you connect others within your network, the more valuable your network will become.
Become a one-stop shop for your real estate investor client. In addition to helping them find and/or sell a property, also help them manage their property, too. Many investors are looking to keep their properties and use them for rental purposes. As a state-licensed real estate agent, you're able to work as a property manager, too. Promote yourself as an agent who can also handle the management responsibilities of a property, including finding applicants, screening applications, collecting rent, handling complaints and maintenance requests, and dealing with unfortunate events, such as evictions.
Working with real estate investors can be lucrative and a wise way to establish your real estate business. To find long-lasting success, be sure to follow the above best practices.