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The Epic Guide to Finding an Investor-Friendly Real Estate Agent

by Ali Boone on July 5, 2014 · 36 comments

  
The Epic Guide to Finding an Investor-Friendly Real Estate Agent

It’s because there aren’t that many of them. Sure, they are out there, but to the untrained eye it may seem like no such thing exists.

What is an investor-friendly real estate agent? It’s one who can actually help investors find properties that match their investing goals. Can’t any agent do that?

They can certainly find properties but they may not know how to find properties that meet the investor’s goals. Why not? Because they work mostly with primary homebuyers and that is what they have been trained to work with.

What’s the difference with what primary homebuyers want to buy and what investors want to buy? Easy- primary homebuyers want location and a house they personally enjoy living in. Investors want a return on their money.

Primary homebuyers will call themselves investors all day long because they think buying a house for themselves is in fact an investment but regardless of whether that is even true or not, the properties that primary homebuyers will buy and the properties investors (should) buy are completely different.

Because real estate agents aren’t trained to understand investment needs, the only real way for an agent to understand (in detail) what it is an investor really needs is to be an investor themselves or have worked closely with investors for long enough that they get it.

What does an agent need to ‘get’ in order to be useful for an investor? Well it depends on what kind of property you are looking for. The two investing methods that you are most likely to be involved with if you are interested in working with a real estate agent are:

  1. Flipping a property
  2. Buying a rental property

There are some methods that integrate both of those, but those are the two primary methods that require certain knowledge sets in order to succeed.

2 Critical Things an Investor-Friendly Agent Must Know

There are various things an agent needs to understand about these investment methods in order to find a profitable property. Each method will require further specific information an agent needs to understand, and I won’t go into those here, but if an agent can at least know these two critical things about an investment property, you will probably be in good shape to work with them.

1. The Market

More specifically, the micro-markets (meaning the more specific areas or neighborhoods of a bigger market). In any big market, there are some areas that will be extremely advantageous for flipping properties but not for holding rental properties. Some areas will be great for holding rental properties but not flipping. Some areas won’t be good for either. Some might be okay for both. An agent needs to understand what about a market (micro-market) creates advantage for each method of investing. Trust me, it’s not as obvious as non-investors think!

Related: How To Find A Investor-Savvy Real Estate Agent

2. The Numbers

An investor-friendly agent will know a) what a cap rate is and b) how to calculate one. Even if you don’t personally use cap rates for residential properties, that’s fine, but any agent who is savvy on investing should know this term and the basic workings of it. More specifically, an agent should understand how to calculate a return.

That’s why you are buying an investment property, right? To get a return on your money. Can the agent tell you what that return is anticipated to be and how they determined that return? For rental properties by themselves, do they know how to calculate cash flow? For flipping properties, an agent certainly needs to understand ARV- ‘after repair value’. If an agent can’t talk about the returns on a particular property fairly quickly and intelligent-sounding, they may not be that investor-friendly.

If an agent at least knows these two things, they are already miles ahead of most agents.

Again, nothing wrong with agents who don’t know this stuff, but you need to be working with someone who fully understands what they are talking about in terms of investing or you could end up either with a lot of wasted time or a bad investment property.

Don’t put it all on your agent though. Understand these concepts yourself. When you know what constitutes good markets and good numbers for investment properties, it will be much easier to shop around for a good agent to work with.

If you know what you are talking about, and they know what they are talking about, you will quickly be able to work at a good pace for finding you a great investment property.

Related: The Real Estate Agent’s Ultimate Guide to Working with Investors

Where Can You Find the Investor-Friendly Agents?

The easiest way is probably through referrals.

Now that BiggerPockets exists (thanks, BP!), it is incredibly easy to just post on the forums asking for an investor-friendly agent for a particular location. Regardless of whether you find an agent through a referral or you scour the internet and call random agents, you should ask about their experience working with investors.

What kind of investors do they primarily work with? What do they look for on behalf of the investors in terms of qualities of a potential property? Here is where they should be mentioning location and numbers. If they don’t, be sure to ask.

Is it a requirement to work with an agent who already knows these things? Absolutely not. You’re welcome to train an agent to what you are looking for, but why not just work with someone who already knows what they are talking about?

Some markets may be harder for that if it’s not a known-investing area so you may be forced to train someone, in which case that is okay too. Regardless, just like with finding any other team member, just start asking for referrals and interviewing different people.

On the Business Side

Right now there is a huge gap between how many real estate investors are out there who could benefit from an investor-friendly real estate agent and how many investor-friendly real estate agents currently exist.

If you are a licensed real estate agent, or have had thoughts about becoming one, realize how big this gap really is. There is a huge need for investor-friendly agents!

Well, maybe not a need necessarily because investors are pretty good at figuring things out without one, but having investor-friendly agents could be very beneficial to investors and I think investors would be glad to offload more work onto an agent. And for you, the agent, dominating your local investor market could prove quite profitable!

I believe real estate has been getting bigger over the last however many years and will continue to expand exponentially because of the advent of the internet (which allows information to be so much more readily accessible) and with the continued uncertainty of our national economy.

So if there is already a huge space open for investor-friendly agents, think of how much bigger that space will get as real estate investing continues to expand.

If you work with an investor-friendly real estate agent for your properties, where did you find that agent initially?

Be sure to leave your comments below!

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{ 36 comments… read them below or add one }

Haider Zaman July 5, 2014 at 12:19 pm

Hey Ali,

Great article! I am a new to the world of real estate. I work full-time (in the finance industry) and have always wanted to take a dive into the world of real-estate. So earlier this year, I got my real estate license and am a fully-certified Realtor in Richmond, VA. My end goal is not to be just a realtor, but I want to explore other REI avenues such as wholesaling, renting out, etc.

I can’t think of a better way to create a win-win than to work with tenured investors who could take me under their wing and show me the ropes while I offer my realtor services.

Any investors in the Richmond, VA area looking for a hard work Realtor, i’d be happy to lend my services.

Thank you,

Haider

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Ali Boone July 9, 2014 at 2:41 pm

Sounds good Haider! If I hear of anyone in that area, I’ll send them your way. I am a licensed agent as well (but in CA) and can talk to you anytime you are interested as well to give you some insight.

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Frank r July 5, 2014 at 12:24 pm

Agents that are wired to think like an investor are few and far between. A solid agent has to be in some form of an investor. Would you feel more confident in someone watching your children that has never had any? Or would you trust someone more that has a few well mannered teens?

I had to get my re license to help myself and others.

Good article.

Frank

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Ali Boone July 9, 2014 at 2:42 pm

Good points Frank, and I agree!

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John Blacklman July 5, 2014 at 12:45 pm

Our company is fortunate enough to work with real estate agents who are investor friendly. Like most things, it’s a matter of aligning incentives. We create a set of rules that makes a purchase viable for our company. The agents who are good at working with investors can use that formula and instantly tell if it is something we will buy. You can also try offering above market fees as long as the deal still works with those fees. This way it becomes a very simple exercise. Here’s are the rules, does the deal work with all of the fees included? If so, we’ll buy it even if we pay above market rate to our “super” realtors.

That being said, we don’t have that many. Investor friendly realtors are a rare breed, but they need to be incentivized so it’s worth it to them to do all of the work that goes into evaluating investor deals which tend to be a lot more than a simple residential purchase.

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Ali Boone July 9, 2014 at 2:44 pm

John, do those agents typically invest for themselves as well?

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Jane July 5, 2014 at 3:47 pm

I am an investor and a realtor. I am more than happy to work with investors in my area. As an investor I understand our needs. In Texas, it’s practically a necessity to be connected to a realtor because we are a non-disclosure state and investors need those comps! That’s the main reason I got my license, for my own business and to help other investors in the area, but I work the retail side, too. I am with the #1 agency in the DFW and Texas markets and we are #3 in the nation. Lots of investors come through our doors!

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Ali Boone July 9, 2014 at 2:45 pm

How is investment inventory Jane? I know we’ve really struggled keeping Dallas inventory on the line this year!

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Jane July 16, 2014 at 7:04 pm

Hi Ali! Not a lot of investment type properties on the MLS at the moment. The DFW market is HOT, (both the retail and the investment side) for sellers. Multiple offers happening all over the place! Probates would be good to concentrate on right now in this local market. I close on a probate property myself at the end of the month, can get it rehabbed in 4 weeks and on the market for retail before the summer selling season passes. Wish me luck!

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Rachel July 5, 2014 at 5:29 pm

Great topic for discussion, Ali!

Personally, I never had such luck finding an investor-friendly real estate agent. The agents I did work with showed me the wrong properties that did not fit the bill with my criteria. Those who did send me listings for bank owned properties expected me to do everything including making offers to the bank. And, let me tell you – working with banks when submitting offers requires so much paperwork especially when they require you to use their addendums!

Since I’m not much of a paper pusher, this route did not work with my personality. So, I had to use other methods to find opportunities. Though, I know working with a real estate agent can be done especially when you find the right folks who actually understand and want to help you!

Looking forward to hearing the experiences of others, great write-up! :)

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Ali Boone July 9, 2014 at 2:54 pm

Thanks Rachel! And yes, that sounds about like most of the experiences I hear about. It’s unfortunate!

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Sue Goldthorp July 5, 2014 at 6:27 pm

Great article Ali thanks for bringing this issue up. I am an investor and Realtor in Florida. Our website visulate.com has the public details of every property in Florida indexed on it with an analysis spreadsheet attached as a link which can be downloaded. I am happy to work with other investors in Florida.

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Ali Boone July 9, 2014 at 2:54 pm

Oh that’s great Sue! What part of FL is your specialty? I’m from Ft. Lauderdale originally.

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Susan Goldthorp July 9, 2014 at 5:15 pm

I am based in Brevard county the Space Coast thats what I know best but I have reasonable knowledge of most of Florida.

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Nasar July 5, 2014 at 7:14 pm

I feel the more you do this business more like minded people you will come across. Alot of Agents dont like investors because they been burned by so many. For example how many Guru’s have told a bunch of newbies to find a agent and have them submit a bunch of offers. And those agents never get a dime in return. And then you have your new fix and flipper who thinks that every flip will be a home run deal. And the agents show them deals but they never buy because they are expecting a 100k profit first deal. But my advice to anyone would be to get to work and you will attract the investor friendly agents.. And as always Ali I love your writing..

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Ali Boone July 9, 2014 at 2:56 pm

Thanks Nasar, and you bring up an extremely good and valid point- the other side of the coin. I hadn’t thought about it but you’re right, I can imagine a lot of people putting agents through the ringer looking for properties and then they never actually start investing so it becomes a wash. I do agree too that eventually you start meeting like-minded folks. I know that has happened in my experience.

Great comment and definitely thought-provoking about how to deal with the other side of it!

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Dave duCille July 6, 2014 at 7:23 am

I’m a new agent and an investor myself and it’s shocking to me the number of agents in my office who know NOTHING about the investing side of things. They pass judgement on lower end properties here in Tampa and have zero vision or understanding of how the numbers can make these incredibly viable properties. Anyone looking to invest in the Tampa Bay area that needs an investor friendly agent, give me a shout!

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Ali Boone July 9, 2014 at 2:57 pm

Sounds good Dave, hopefully people reach out! And yep, that’s about the standard it seems like, unfortunately.

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Justin July 6, 2014 at 10:23 am

I am an Investor at heart and a Realtor in Oregon. I got my license to take action on becoming an Investor learn the ropes and en grain myself in this exciting world. My first client was an out of state investor. My second biggest client also an out of state investor. Turns out most the deals I have done are not turn key ready properties. I have taken the hoarder/tear down listings others have walked away from or who were unwilling to do the work associated to actually make them sell. I do not want to be the “Normal” Realtor that only deals with residential turn key properties and clients. Coming out of IT really helps with the challenges of out of state buyers and sellers and opens me up to other opportunities

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Ali Boone July 9, 2014 at 2:58 pm

Sounds like you are doing great, Justin! Very cool. And yes, plus not just doing the primary homebuyer SFRs and getting rowdy with non-ready properties keeps things exciting!

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Ed Young July 6, 2014 at 10:47 am

It has been my experience that Investor-Friendly Realtors have an experienced, successful team supporting them full-time.

A crack team in mandatory for evaluating distressed properties; working the court house steps with cashier’s check in hand (and having alternatives if the auction is cancelled, as often happens); buying at 10-20% below FMV; rehabbing efficiently and frugally, and, finally, having the market savvy to know whether to flip right away, or hold for a year (in which case, the Realtor MUST have an experienced property management team behind them to concentrate on finding and screening viable tenants, legal/evictions, maintenance (24-hr) etc.

In short, it is not so much the Realtor (although they must be top tier as well), whose job is to show and close, but the team BEHIND the Realtor that makes the difference. So, to all the investors out there, do your due diligence about the Realtor’s TEAM – how many decades experience does the TEAM have buying and selling – what is THEIR annual ROI, what are their economies of scale, proprietary software, etc. – find THAT Realtor, and you will invariably make an appropriate investment.

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Ali Boone July 9, 2014 at 3:00 pm

Excellent put Ed as I hadn’t thought about that and you are totally correct. You bring up a good point about what extra skills a Realtor (or their team) needs to have to deal with investment properties. Not all the good properties can be found on the MLS so someone needs to know how to head for the courthouse and make it work there. Depends on what the investor is trying to buy of course, but excellent thought and yes the team is critical for that.

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Eric Blanchard July 7, 2014 at 10:23 am

Thanks for the article, Ali. It reminds me of the first Realtor I ever worked with – she told me I’d know when I found the right house because I’d fall in love with it. I didn’t work with her for long!
I did eventually find a good Realtor, here on BP.

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Ali Boone July 9, 2014 at 3:01 pm

Definitely a sign of an agent who works with primary homebuyers Eric :) Investors shouldn’t fall in love with their investment properties (usually). That is definitely more in line with buying a house for yourself. Glad you found an agent through BP! That’s the kind of thing the site is here for, definitely.

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Omar Rivera July 7, 2014 at 12:49 pm

I was never able to find an investor-friendly agent, after working with several I decided to get my license to represent myself in my purchases. Now I can tell you from an agent’s perspective, as Nasar mentioned, I think its much harder for an investor-friendly agent to find good, worthwhile investors. Newbie investors take a lot of time and education and rarely ever actually purchase when its all said and done. Too many people are “interested” in investing, but don’t have the courage to pull the trigger.

I primarily focus on growing my own portfolio these days but am still working to work with serious investors in the Austin, TX area.

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Ali Boone July 9, 2014 at 3:02 pm

You and Nasar are definitely right, Omar. Great thing to consider from the agent’s standpoint. It brings up an interesting thought as to how to make it all work for everyone involved, but as Nasar said, I think it’s about people meeting the like-minded folks and just networking so everyone can find who works for them.

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Tom McCombs July 7, 2014 at 2:45 pm

As an investor, if you are serious about buying properties — and actually do buy some properties — you will have investor friendly and highly qualified Realtors standing in line to help you.

It is mostly the newbies who complain that they can not find Realtors to help them. It is not that newbies don’t get the help they want, it is just that they may not act on it often enough to make it worth the Realtors’ time.

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Ali Boone July 9, 2014 at 3:03 pm

Tom, are you suggesting there are investor-friendly agents in all markets? Define ‘highly qualified’ when it comes to agents who work with investors….how much do they need to know in order to be helpful?

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David July 8, 2014 at 11:20 am

What a great article! I come from a long line of real estate investors in my family. I currently have 4 rental properties, a full-time corporate finance job and working part-time as a real estate sale person in the NYC, southern NY and northern NJ areas. This article gave me a lot of insight on how to reach out to the contacts that I want to meet in real estate. About a year ago I got my real estate sales license because of my passion for investing in real estate and wanting to turn it into a full time career and eventually leave the corporate finance job. My passion is developing, flipping and/or renting out properties in areas that are up and coming where you can get great deals on multifamily properties. Loving that I have found BP to learn and connect with like minded people!

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Ali Boone July 9, 2014 at 3:04 pm

Yay David! Glad it helped and it sounds like you have a lot of potential to really build an empire in your area. Keep us posted on how it goes!

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Robert Adams July 8, 2014 at 5:03 pm

Informative post! Thanks for posting! I am an investor friendly Broker in NV, MA, and RI.

Best Regards,
Robert Adams
Licensed Real Estate Broker NV#62827 MA#9530304 RI#18138

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Ali Boone July 9, 2014 at 3:05 pm

Great Robert, hopefully some investors out there will reach out and you can help them!

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Jaghey July 11, 2014 at 6:59 pm

Agents that are wired to think like an investor are few and far between. A solid agent has to be in some form of an investor. Would you feel more confident in someone watching your children that has never had any? Or would you trust someone more that has a few well mannered teens?

I had to get my re license to help myself and others.

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Ali Boone July 14, 2014 at 12:11 am

Ha, I like that Jaghey. I’d go for the parents of the well-mannered teens :)

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Sara Cunningham July 16, 2014 at 9:44 am

I think I got lucky my agent works for one of the big national companies and has been able to help me with having a good team of support in the form of inspectors and title companies for closing.

I met her because she had a property listed that we ended up buying. She was also new to the business so we have been able to learn together. Although she ends up putting in a lot of offers that never get accepted or sometimes we pull out of a deal due to inspections she has stuck with us through it all.

It probably helped that we also had her list and sell our primary residence twice so maybe that made up for some of the cheaper properties she chases for us haha.

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Ali Boone July 17, 2014 at 1:10 pm

Nice Sara! What market is that in?

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