Strategic ways real estate agents fund investment properties

Real Estate Agent · Salt Lake City · Member since 2018 · 11 posts · 4 votes

So, I'm a new agent to the salt lake area. As we all know, being an agent can provide many advantages to building your investment portfolio. I'm currently working on my first live in flip and looking for strategic moves to fund my future deals now being on the front line.

My question for all you Realtors out there, what are some creative ways you've used your license to help fund deals? Example: used buyer commsion as part of down payment, negotiated commission out of sales price, tax benefits, etc.

On another note, I'm a NEW agent and still hold a W-2 job while I build my agent business. Should I get into a property while I still have verifiable income over the next few months? I'm open to all suggestions!

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Cherie Orellana

Salt Lake City, UT · Member since 2018 · 219 posts · 182 votes

I have found off market deals and been paid 6% towards my down payment plus build closing costs into the loan. I have also renegotiated after inspections and instead of price reduction or repairs I have increased commission amount that I use to offset down payment as well.

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Amy KendallBusiness Member
Real Estate Broker · Lehi, UT · Member since 2016 · 397 posts · 318 votes
7y
@Dane Kania Being a real estate agent definitely offers some good advantages when it comes to your own deals! I did use my commission as a negotiating tool when I purchased one of my rentals in Springville. We had gone back and forth with counters and dropping the commission was the last piece that made the deal happen. Over the past few years, I have also built a few new townhomes, and getting that commission check a few days after closing sure helps spring you forward into buying another property! Getting a loan will definitely be very hard or impossible until you can show your earnings on your taxes for two years; so, it might be worth holding onto your W-2 job until you acquire another property. I hate to say that, because I really saw a benefit to committing myself full time to being a realtor. But in the long run, if you want to work with other investors, it certainly helps to have properties and experiences of your own to relate to. Best of luck to you!
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Dane KaniaPro Member
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Real Estate Agent · Salt Lake City · Member since 2018 · 11 posts · 4 votes
7y
@Amy Kendall thank you for the insight! That's one thing I'm struggling with. I feel like I can excell my realtor business if I was full time. However, bills don't care about giving you time to build that business. Hence, keeping my W-2 job for a bit. It's super exciting finally leaping into the all things real estate! And agree with you on the potential it has for ones family! I see your a Utah local? Maybe coffee sometime. I would love to hear your strategies!
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Jackson Pontsler
Flipper/Rehabber · Salt Lake City, UT · Member since 2016 · 211 posts · 174 votes
7y
@Dane Kania if you are going to be continually purchasing rentals you need to keep up your debt to income ratio. This is the advantage of maintaining a W2 job. Another way to fund your deal is to always be asking if seller financing is on the table. We are able to secure a deal right now via seller financing that will have a huge upside for future developments.
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Amy KendallBusiness Member
Real Estate Broker · Lehi, UT · Member since 2016 · 397 posts · 318 votes
7y
@Dane Kania I am good to talk anytime. Shoot me a message and we can meet up next time you are down in Utah county.
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Ivan BarrattBusiness Member
Investor · Indianapolis, IN · Member since 2015 · 764 posts · 953 votes
7y
@Dane Kania study creative real estate finance further. Best part about being an agent is getting early looks at deals and using commission as capital.
If I were starting over as a young man I would house hack 2-4 families as fast as possible. BRRRR but after refinancing I would seek to do another owner occupied FHA loan on a 2-4 family with a value add component.
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Jake FugmanBusiness Member
Real Estate Broker · Chicago, IL · Member since 2016 · 256 posts · 250 votes
7y
@Dane Kania Im a full time agent, and do my own buy/hold/flips. Id say the largest subjective benefit is early exposure to deals. Especially if you plan on ever representing investors on the buy/sell side, it will definitely help you stay sharp all the deals in your area since you are seeing what works for your most successful clients.
One downside is that depending on your state and sponsoring broker you will have to disclose your status as an agent plus even be required to pay for home warranty on your personal sales. There are several extra processes that more or less make sure an agent isnt ripping off a buyer or seller - so do your homework.
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Cherie Orellana
Salt Lake City, UT · Member since 2018 · 219 posts · 182 votes
7y
I have found off market deals and been paid 6% towards my down payment plus build closing costs into the loan. I have also renegotiated after inspections and instead of price reduction or repairs I have increased commission amount that I use to offset down payment as well.
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Becca Summers
Real Estate Agent · Highland, UT · Member since 2015 · 407 posts · 272 votes
7y
@Dane Kania being new you need the W2 job to qualify and there are loans that you can do being self-employed after one year but most are two years and they will average your income for the two years. I agree being full time really helps get your business going but it's like pushing a snowball uphill for at least a year to two years depending on how you focus your time.
You can use the commision as part of your down payment on some loans. I like to use the commision to help offset the downpayment I already have. It helps the cash on cash return to be better. The lender doesn't care what your commission is so there was one deal that the seller paid me more than the average commision and I used that money for the renovation.
In Utah, you do have to disclose that you are an agent and you can't represent a seller off the market if you are a principal in the transaction. You can have them sign a non represented seller in that case.
I think the best advantage is being able to run the numbers on the ARV or the rental amount.
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