Real estate investors have a different perspective, and a different set of priorities, from traditional buyers and sellers, according to Clever’s Luke Babich. These 10 essential skills will help you cultivate and build successful relationships with real estate investors.
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Real estate agents must strike a careful balance between closing the deal and protecting their clients. Buying a home is the largest purchase most people will ever make.
But what about agents working with real estate investors? This group of specialized clients isn’t looking for a place to raise a family or start a new life — they are looking to build a portfolio of profitable investments. Here are 10 essential skills you’ll need to cultivate to build successful relationships with real estate investors.
Working with investors is not the same thing as working with potential homeowners. Finding the right property can take more time than they think. You need to stay patient and persistent even in the face of pressure from an investor to find The One Best Property.
2. Expertise in the market
You may know agents who specialize in one particular neighborhood or one specific type of property. An agent working with real estate investors needs to have expertise in that plus a more specialized focus on the investment market. This includes knowing things like:
- Where renters are more likely to live
- Legal implications of purchasing investment properties
- The current and projected state of the real estate market
You’ll also need to be well-versed in your client’s area of interest in all of the markets and submarkets. Things are changing in real estate, and it’s important to make sure you’re up to speed for your investors.
3. Understanding of what makes something a good deal
The real estate agent’s role might be to negotiate and help buyers make good choices, but more critical is their ability to find deals in the first place. In a tight real estate market with lots of competition, good deals and rare finds are on and off the market within hours. The best agents know how to sniff out these deals and get their investors on them fast.
This also means that before you send a deal to a client you’ll need to take the time to research more than neighborhood comps and the closest schools. Estimate cash flow and the cash-on-cash return of any deals before sending any listing to a client. Experienced investors appreciate this attention to detail and see that the agent on the other end understands what they are trying to accomplish.
4. Negotiation skills
Negotiation skills are important for any kind of real estate purchase, but investment properties require something altogether different. Your client won’t live in the property — it’s strictly a business deal, and the ROI is the most important thing.
Don’t be shy in representing your investing clients as they buy and sell properties. They want a tough negotiator who can get the best price.
5. Financial knowledge
One of the first steps in buying a rental property is doing the math: which type of financing is the best for the investor’s goals, cash on hand, and timeline? Agents for investors need to be able to advise their clients of their options, and that means:
- Taking an investor’s other properties into consideration
- Understanding if the goal is to fix and flip, buy and hold, or speculate (and tailoring your advice accordingly)
6. The ability to protect investors from themselves
New investors typically make at least one of the three following mistakes when looking for an investment property:
- Paying too much
- Underestimating the time and expense required for repairs
- Unrealistically pricing their repaired property
As a trusted advisor, you are in a unique position to protect them from themselves. You know the price the market will bear after a property is fixed, and you understand that every repair takes longer (and costs more) than investors think it will.
This is why it’s important to learn the fine art of saving new investors from sinking their ship before it even leaves the harbor by advising them of the reality of each property so they can make an informed decision.
Not all deals are good. If an investor is gung ho on a property that will land you a big commission but put them in hot water, it takes tact and integrity to help them walk away. This might cost you a big commission, but in the end, your investor will appreciate that you put their success over your payday.
7. Personal experience investing
The best way to understand how to be a better agent for your investing clients is to become an investor yourself. You’ll have first-hand experience of what it feels like to struggle through renovations for a flip or find renters for a buy-and-hold property. You’ll understand what it takes to get financing for an investment property — and how different the time frame is — and you’ll have a new appreciation for managing multiple properties at once.
This experience makes you a better agent for investors because you can show them that you know what they are going through.
8. Technological know-how
It’s strange but true: some investment properties are purchased sight-unseen, with just an e-signature standing between an investor and their new acquisition. If you’re stuck in an era of in-person, paper-based viewings and closings, you’ll struggle in this brave new world of technological advancements.
9. Referrals for resources
The best agents for real estate investors are those who can be as much of a one-stop shop as possible. You should have the following referrals in your back pocket:
- General contractors
- General trades (such as plumbers, electricians, etc.)
- Institutions that offer financing
Note that some states have laws regarding how referrals can be made. If realtors receive financial compensation for any referrals, that must be disclosed.
Integrity plays a key role in the legal and moral obligation you have when it comes to fair housing practices. This means taking the time to become a more inclusive agent, raising your understanding of different cultures, and communicating more effectively with people from a variety of backgrounds.
It all comes down to relationships
As with every successful person in any industry, agents working with real estate investors must focus on developing solid relationships with their clients. Built on a foundation of trust and good communication, these relationships can be productive and profitable for everyone.