Reasons Investors Should Enlist Real Estate Agents

There are some notable benefits real estate investors can derive by enlisting the services of realty agents to help them find investment properties. In this article, I want to point out just a few, lest investors wrongly conclude that real estate agents are not needed, and as a result, perhaps lose an opportunity to find the buried treasure they have been seeking.

Foremost, a good agent understands the local neighborhoods or towns you have narrowed as your choice location for making a purchase. Consequently, you not only are spared the legwork of having to do your own research, you avoid having to guess which areas are strong or starting to get hot. Good agents know the market and what rental properties are selling for. So they can truly guide you; you just sit back, ask your questions, and learn.

This is not to say, though, that you should shoot yourself in the foot and meet with an agent simply to gather the valuable information you want so you can go it alone. The idea is for you to enlist a real estate agent as a loyal and trusted partner because at the end of the day having a faithful “insider” eager to show you the properties that are (or about to come) available is where the payoff is.

I can’t count the number of times I turned my loyal customers on to a particularly juicy rental property the minute it was listed. In this case, time is of the essence because profitable deals generate a stampede of activity, and when my customer did in fact secure an acceptable offer, it was because he or she won the race thanks to my alert.

Along these same lines, you might have your eye on a specific income property that is not currently up for sale. Here again, having a close relationship with a dedicated agent who knows exactly what you want can make all the difference because you get a call when it does become available.

Fair enough. But there are other ways a good agent can assist you in addition to showing you properties and neighborhoods.

1) Help you run and interpret the numbers. True rental property specialists regularly have a real estate investment software solution in their arsenal of tools that will create cash flows and rate of return presentations. So you can better understand a property’s profitability, and see whether or not your investment objectives are met.

2) Suggest financing sources and techniques of which you might be unaware.

3) Present comp sales and rent levels to help educate you about realistic market values for the types of rental property in the areas you are seeking.

4) Act as your intermediary in negotiations to help persuade sellers to accept your price and terms, as well as handle innumerable details and problems that commonly seem to surface from contract to closing.

5) Recommend other professionals whose services you may need such as a contractor, property inspector, or property management firm; and maybe even suggest possibilities for value-creating improvements.

6) Share about future development plans for an area that might impact (for better or worse) a particular type of investment property, or about the pros and cons of various properties that might otherwise have escaped your attention.

In other words, your agent can become an effective partner that will help you sort through your neighborhood and investment property trade-offs, suggest realistic market values, keep you informed about what is for sale, and assist you through the buying process from start to finish.

Take it from someone whom investors have enlisted to aid them with real estate investing. All things considered, yes it was good for me to remain faithful to my investor-customers; but likewise, when all’s said and done, those investors who remained loyal to me over the years would gladly admit that it was good for them, too.

Agents Must Earn (Not Expect) the Respect of Real Estate Investors

Real estate agents (for better or worse) have come to anticipate respect from colleagues based upon their long list of awards, accolades, and performance. Fair enough. Brokers are smart to award the top producers in their office, and colleagues are normally going to put those earning the type of money they could only dream of on a pedestal.

In the real world, though, real estate investors are not persuaded by wall-to-wall awards or certificates, the agent’s office size or staff, or by the agent’s clothes or model of car. Sure, investors can be impressed by an agent with a large office who wears Armani and drives a Mercedes, but I’ve never met an investor yet willing to make an investment decision solely because an agent has panache; or for that matter, the lack of it.

Over the course of my real estate career I have successfully serviced investors with and without the trappings. And I can tell you honestly that neither my successes nor failures were dependent on the “stuff” I brought with me. It was never about me, it was always what I brought to the table for the investor that mattered.

Here’s my point. You can expect applause and respect from those that surround you, but don’t expect it from anyone about to invest a large amount of money in a property simply because you are the one making the presentation. Remember, it’s not about you. What matters most to the real estate investor is whether or not the investment makes money; and any hope you have about earning an investor’s respect rests upon your ability to present those investment opportunities correctly.

1) Foremost, care whether or not a purchase or sale is in the best interests of the investor. Giving sincere advice about whether or not an investment decision is in fact a prudent choice goes a long way for agents because it will cause investors to trust you rather than to hold back or shun away because you appear to be more concerned about your well-being than theirs.

2) Understand what investors really care about. Unlike a home buyer who is primarily interested in nesting a family, real estate investing is about profit. So avoid trying to sell a rental property because it has good curb appeal, large kitchens, or is located in a particular school district; unless the amenities can be shown to translate into rental dollars, they matter little. What matters most to investors is the bottom line. Is the rental property profitable? That’s what you must be prepared to tell the investor; otherwise you might be perceived as one without income property understanding. You know the adage, “If it walks like a duck and quakes like a duck…”

3) Make meaningful presentations to assist in the investment decision process. This way you convey to an investor that you know what you’re talking about. Yes, a comparable market analysis counts, but it’s not enough. Remember, it is more than price or price per square foot that will persuade an investor. For example, a seller wants to know what price his or her property might sell for based upon average market cap rates for similar properties and the sale proceeds they could receive after taxes in the event of a sale. Whereas buyers would want to know the cash flows, rate of return, overall profitability, and potential sale proceeds that could be collected in the event of a subsequent sale.

We can go on, of course, but hopefully you get the idea. When you work with investors, don’t expect loyalty because you have had successes with home buyers. You must earn their respect by walking the walk and talking the talk in matters that they care about most.