What every realtor needs to know about working with Investors

Real estate investors are totally different types of buyers than your normal retail buyers.  Most agents are taught to deal with retail home buyers and never learn what goes on in the mind of investors.   Investors are looking for pretty specific deals.  Realtors who take the time to learn a little about real estate investing and what investors really want, they can build a very good business just from investors.

Purchase Price

What most realtors struggle with is that most investors will not pay more than 65 or 70% of the after repair value or market value.  If the property needs any type of work, the investor will reduce their price to reflect that along with holding costs.  The formula that most investors use is they take the retail value multiplied by 70%, minus repairs, minus holding cost, closing costs and a commission if there is one.  Every realtor should know this formula and use it when finding property for investors.

Financing

So how do investors buy property?  A lot of the time they use their own cash, private investors, or hard money lenders.  Knowing that they are using these types of short term financing a realtor should network with different private investors and hard money lenders to provide more options for their investors.  An investor will love any realtor who goes the extra mile and finds them money to purchase their deals with.  If you were a realtors why would you not do this for your investor clients?

Exit Strategies

The profit for investors is made when they purchase the property, but investors do not get those dollars until their exit strategy has kicked in.  What are all of these exit strategies that investors use.  Well there is the simple MLS listing but investors use strategies like owner financing, lease options, renting, wholesaling and the traditional selling.  Realtors should also know all of these strategies and be flexible with any exit strategy that may come up.

Creative Thinking

Some investors are known for thinking a little differently and doing whatever it takes to get a deal done.  Investors come up with non-conventional solutions for problems.  Most realtors are taught not to think this way or are set in their ways to accept creative ways to get deals done.  Some realtors think that what investors are doing is illegal when the idea is completely legal, viable and protects their clients.  Something like a short sale might not look like a great thing for a client but if the client is struggling to sell the house and might end up losing it, then a short sale is in the best interest of the client.

Multiple Deals

Investors want to do several deals.  I know that I am going to be doing 3-5 deals a month consistently in the next few months.  Most realtors are scrambling to attract new buyers that will buy one property on average every five to seven years.  Successful investors are buying multiple properties every year if not every month.  While investor may ask their realtor to submit twenty plus offers a week.  Spending time with a guaranteed buyer who can close and who is patient to find deals can be very beneficial.  Why chase after five buyers for five deals or work with one buyer to buy all five.  There are some instances where a realtor needs to work with other buyers because an investor won’t buy retail property.

Many realtors do not like the fact that investors use multiple realtors to ensure there is a steady flow of deals coming in.  Most realtors would like investors to only work with one realtor.  A realtor might even get their feeling hurt when they find out their investor is getting deals for other agents.  What they do not realize is that if they took the time to learn how to invest, this would almost guarantee that investors would take the time to turn more of their business over to them.

The biggest hurdle of all is finding an investor friendly agent that has an open mind and is flexible.  Realtors and investor often need a period of mutual training to get use to working with each other and figure out each other’s wants and needs.  Some realtors really know what is going on and how to work with investors but everyone needs to educate themselves about all types of real estate and real estate investing.

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