Getting into the mind of a real estate investor

There are two kinds of real estate agents: those who work with investors and those who do not. Whether you have encountered flippers, buy-and-hold investors or the occasional wholesaler, if you had a bad experience, you might not want to work with investors ever again. However, with the right strategy, many real estate agents have discovered that the benefits of being investor-friendly can outweigh the frustrations.

Dealing with real estate investors can be quite profitable, but you do have to be ready to do some work and to be patient. It’s true that many would-be investors lose interest before they make their first purchase, but surveys show that there are between seven and 28 active investors for every one real estate agent in the country. If you can learn to understand what an investor is looking for, you may be able to tap into this lucrative market.

Expanding your business with investors

Unlike your average home transaction, your investor clients are not necessarily looking for family-friendly neighborhoods and granite countertops. They are looking for passive cash flow and motivated sellers. They want a once-in-a-lifetime deal, and they want it fast. Therefore, you will have to have a system that is driven less by the emotion of the sale than by the income potential. Other important things to know about investors in general include:

  • Investors often have niches, such as multifamily properties, shopping centers, office complexes or multi-use buildings, so you will want to learn about these areas.
  • Many investors make multiple transactions each year, and some flippers may turn dozens of properties each month.
  • They typically have a wide network in the community, which might mean valuable referrals coming your way.
  • They understand the real estate process and usually need less hand-holding.
  • Buy-and-hold investors need properties that will provide positive cash flow.
  • Buying investment properties often requires creative financing, and it will be important to know up front your clients’ plans for financing the deal.
  • Some investors use the technique of lowballing dozens of sellers on the off-chance that one will accept the deal, so you should know your boundaries in this area.

Since investment is such a complex area of real estate, you might want to take advantage of any resources available to prepare yourself for working in this niche. Additionally, as distasteful as it may be to work with new investors, your guidance may provide the information they need to make a successful deal, which can be the start of a mutually beneficial relationship.

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