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

Expertise: Real Estate Investing Basics
580 Articles Written
Do you hate working with investors?

Perhaps you’ve worked with investors before—maybe helped a young couple buy a rental house. Maybe you're interested in adding “investor-friendly” to your list of qualifications. Or maybe you’ve worked with investors before and... you hate working with us. Like I said: We can be difficult. (We know!)

Perhaps you spent hours with a “wannabe” investor trying to help them find a deal, only for them to give up, wasting your valuable time? Or perhaps a deal fizzled just inches away from closing after they decided they didn't have enough money for an investment property. This happens far too often and for that, I’m sorry.

However, there are ways to avoid these problems and maximize your income—without sacrificing your time working with unqualified investors. You need to get inside an investor's mindset. You see, we don't think like everyone else, which is where the disconnect often happens. Real estate agents are accustomed to first-time homebuyers, which means they might misunderstand what an investor really wants. For example, an agent may tell an investor:

  • “This house is located in a really great neighborhood!”
  • “This property is perfect for a large family.”
  • “Aren’t these countertops just gorgeous?”
While yes, these are important topics for conversation, most investors would rather hear:

  • This house could produce $250 per month in passive cash flow.
  • The seller is very motivated—the house has been listed for more than six months!
  • Isn't that smell terrible? It's scaring off the competition.
Of course, some investors do make life hard for agents. We're not proposing you work with them—that wouldn't make much business sense, either. Some don't understand the benefits of working with a qualified agent, nor the work involved in the buying and selling process. Some investors want their agent to work 100 percent for them, putting in a ridiculous amount of offers that will never be accepted. Many investors even wonder, "Why should I work with an agent anyways? All they do is put my listing on the MLS and sit back to take a cut." (Clearly, that's not true—just saying what I've heard!)

Those investors need to learn how to work with real estate agents, too. A strong real estate agent is one of the most important members of an investor's team—and a strong investor should be one of the most important members of an agent's team. Together, the synergy created by this alliance can transform both parties and do tremendous things, make a lot of money, and lead to a long and prosperous relationship.

Benefits of Working With a Real Estate Investor

As an agent, a good portion of your time is spent generating leads. Whether it’s a photo on the side of a bus, a paid profile on Zillow, or simply handing out business cards at a networking event: leads are the lifeblood to a real estate business. However, all leads are not created equal.

In Tim Ferris's book "The Four Hour Workweek," he talks about harnessing the power of the "80/20 rule" to increase productivity and output. Essentially, this rule states that for many events, roughly 80 percent of the effects come from 20 percent of the causes. Twenty percent of your neighbors cause 80 percent of the noise; 20 percent of my bean plants produce 80 percent of my beans. And 80 percent of the world's wealth is controlled by 20 percent of the people (although I do think there's likely a much bigger disparity there).

I believe this same 80/20 principle can also be applied to business—especially the real estate business.

  • What if 20 percent (or less) of your clients produced 80 percent (or more) of your income?
  • What if you didn’t have to spend money getting new leads—because you don't need any more leads?
  • What if all that money you are paying Zillow went toward your kid’s college education?

This is not only possible—it’s happening every day all across the world when smart real estate agents team up with investors, because we can easily become your number one source for income in your real estate career. Here's why:

MULTIPLE DEALS
Let’s start with the obvious one: Investors buy a lot of property. While some investors buy one or two properties per year, other investors make dozens or hundreds of deals per year. Just a few investor clients in your Rolodex can earn you more income than all your other clients combined.

THERE ARE A LOT OF 'EM
According to a joint 2012 survey from BiggerPockets and Memphis Invest, there are more than 28 million real estate investors in America—and seven million claim to be “active real estate investors” interested in buying property in the next year. That’s a lot of investors, especially considering that the NAR lists only about a million real estate agents in the country.

INVESTORS BUY AND SELL OFTEN
When dealing with a typical homeowner, the cycle between buying and selling can be years or decades. And a homeowner will be looking to either buy or sell—but not always both. Investors, on the other hand, are typically buying and selling all the time. Your ability as an agent to make money can skyrocket when working with us.

SYSTEMATIZE YOUR BUSINESS
An investor typically has much less "emotional attachment" to the property, thus making the whole process much more mechanical. While that may not sound like a fun thing, it's actually great for your business because of your ability to create systems to handle much of your business.

For example, when dealing with a first-time home buyer, emotional things like a cute color, a dog house, or a swing set can make or break a buyer's interest. However, when dealing with investors, you can learn what appeals to that investor—specifics such as neighborhood, cap rate, price, or income potential—and set up automatic emails.

You can also systematize the offering process. With most investors, you won't need to schedule a time to sit down with them and write up an offer. No need to carefully explain each word on the 1,000,000 MLS forms. Instead, you can email over the same form, allow your investor client to sign it on their iPad, and submit the offer all during your lunch break.

INVESTORS KNOW THE PROCESS
Experienced investors understand the game. They won’t balk at the closing table when they realize that the agents are making six percent off the deal. They won’t freak out over some rot in the bathroom floor. And hopefully, they'll do their own homework on finding financing—though, you can assist with that, which we’ll touch on later.

REFERRALS
Most investors are heavily involved in the community and, as a result, have a wide network of people hunting for a good agent. Investors love to strengthen their connections by sending recommendations—so if you are a great real estate agent, expect your investor clients to brag about you and tell all their friends about your services.

FREE INVESTING ADVICE
Chances are, you don’t want to continue working until the day you die, so building your own investment portfolio may be a near-term goal. You can learn from real life investors, and get paid to do so. You get an inside look into how they negotiate, analyze property, and choose financing. Many individuals pay tens of thousands of dollars to learn the stuff. You'll get an inside look everyday.



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What Agents Should Know About Real Estate Investing

As an agent, you don’t need to be a pro investor. You don’t need to know everything–but if you want to become an “investor-friendly agent,” it’s wise to learn the fundamentals. In a way, we’re back at the 80/20 rule again: You don’t need to know 100 percent of what there is to know. Knowing just 20 percent will help you tackle 80 percent or more of the issues that will ever come up.

At it’s core, a real estate investor generally focuses on two things:

  • A niche: A type of investment property, like single family homes, small multifamily, or apartments.
  • A strategy: The way the investor makes money, such as fix and flipping, buy and hold, or wholesaling. 

Although investors may focus on several different niches or strategies, it's important to know what kind of investing your client prefers and how they view a potential deal.

Fix and flippers

If you’ve ever watched a flipping show on television, you know what a house flipper does. Essentially, they purchase a property in need of cosmetic help for a steep discount. They then fix the problems, beautify the project, and re-list the house for a retail sale. 

Working with an experienced fix and flipper may be one of the most profitable ways to work with an investor. Busy fix and flippers can buy or sell dozens of houses a month. Some investors focus on complete rehabs that  run in the hundreds of thousands of dollars, while others are simply looking to add paint and new carpet and re-list the home.

Fix-and-flippers, by necessity, need to score incredible deals in order to turn a profit and hedge against any unforeseen problems. While some investors will fire off hundreds of low-ball offers, hoping to get just a small percentage accepted, other investors work more methodically and only go after targeted properties. Either way, you should expect to have a lot of offers rejected when working with an investor, simply because an investor must get a good deal.

As an agent, this can clearly be an obnoxious task, so it’s important to decide for yourself what you will and won’t do—and make it clear to your investor up front. We’ll talk more about this later in the section on “making offers.”

Additionally, for fix and flippers, speed is incredibly important. In a competitive market, good properties are snatched up in minutes—so be prepared to work fast and have systems in place for fast offers.

During the sale, a flipper generally has tremendous holding costs. Getting the property sold as quickly as possible is especially important, as these expenses quickly eat at the flipper’s profit. Most flippers don’t try to shoot for the moon when selling their properties. Instead, they prefer to price their property competitively—so keep that in mind and don’t tell your client a “hopeful” number. Be realistic and your investor will respect you for it.

If you are working with a new investor, I encourage you to introduce them BiggerPockets' Fix and Flip Calculator. This tool allows investors to estimate all the costs of flipping a house to maximize their chance of making a significant profit.

INVESTOR GLOSSARY: The 70 Percent Rule
One of the easiest tools an investor, or agent, can use to analyze a potential flip is known at the 70 percent rule. The 70% rule says that you should only pay 70 percent of what the after repair value is, less the repair costs.

This "rule of thumb" is used to quickly determine the maximum price one should pay for a property based on the after repair value (ARV). Flippers use this rule most often, but the 70 percent rule can actually be used for any strategy when you want to find a good deal.

Real world example: After repairs, 123 Main Street should sell for approximately $200,000. It needs approximately $35,000 worth of work. Using the 70 percent rule, a person should multiply $200,000 by 70 percent to get $140,000—and then subtract the $35,000 in repairs. The most an investor should pay for 123 Main should be $105,000.

Don’t confuse a rule of thumb for a license to skip doing your homework. The 70 percent rule quickly, efficiently—and roughly!—screens a property to decide if it’s worth further investigation. Never use a “rule of thumb” to decide exactly how much to pay, or if you should invest or not. If a property passes the above rules (or gets close) it may be worth a more detailed analysis. 

As an agent, you can quickly and easily scan through many properties to see which come close to suiting your client's needs, then send over only the best deals.


Wholesalers

Wholesalers search for amazing deals from motivated sellers, sign a “purchase and sale agreement” with that seller, and then assign that deal to other investors for a fee. That fee typically ranges from $2,000 to $10,000, though it's dependent on the deal. In a way, they are similar to a real estate agent. They get paid to bringing together a buyer and a seller. 

While agents don't generally work much with wholesaler—typically they are looking for properties to buy and sell without involving an agent—it’s still a good idea to understand what a wholesaler is and how they work. You are most likely to work with a wholesaler when one wants to offer on a house listed on the MLS, which does happen quite frequently.

Buy and hold investors

Most investors are buy and hold investors. As the name suggests, the buy and hold investor purchases property for the long haul. Some look for beautiful turnkey homes. Others want junky properties. Most, however, search for something in between. No matter their precise strategy, buy and hold investors all want one thing: positive cash flow.

INVESTOR GLOSSARY: Cash flow

In the most simple terms, cash flow is the extra money left in the investor’s bank account after all the bills are paid, including those expenses that don’t come on a regular schedule, like maintenance and vacancy. Cash flow is typically reported monthly, although some investors do calculate annual cash flow.

To calculate potential cash flow, simply subtract a property's total expenses its income potential. That may sound easy, but determining "total expenses" can get complicated. What about vacancies? Eviction costs? Legal fees? Maintenance costs?

Here's an example. 123 Main Street is a single-family home listed for $100,000. Your investor client plans to purchase the property with a 20 percent down payment—that's an $80,000, 30-year mortgage at five percent APR with a total mortgage payment of $429.46 per month. Taxes are $1,200 per year, or $100 per month, and insurance will be around $600 per year, or $50 per month. The future tenant will be responsible for all utilities and other charges, so the total fixed expenses come to $579.46 per month.

If rent is about $800 per month, you'd think cash flow should fall at $220.54 per month. This is where the average real estate agents stop and tell their clients about this great, cash flowing deal. The picture changes when you analyze expenses more fully. For example, if the investor plans to hire a property manger, add another 12 percent each month in fees. Additionally, account for five percent of the totally yearly income for vacancy and 10 percent (or more) for maintenance costs. Suddenly, the cash flow looks a little different:

Rent: +$800
Mortgage: -$479.46
Taxes: -$100
Insurance: -$50
Property manager: -$80
Vacancy: -$40
Repairs: -$80
Total Cash Flow: -$29.46

Notice how quickly the once “awesome cash flow” deal disappeared? These numbers don’t even include eviction costs, major repairs, such as a new roof or parking, or other unforeseen charges.


At this point, hopefully you identify the reasons behind that disconnect between real estate agents and investors and understand what qualifies as a “good deal.” Decent investors always run these numbers ahead of time. By sending your client deals that aren't deals, you waste their time and yours—and ultimately cause division.

When is negative cash flow okay? 

For me? Never. However, every investor is different, which is why it's important to understand what your investor wants. Some investors will accept negative cash flow because they believe that appreciation—or the rise in home values over time—will increase more than the loss they are taking on their monthly cash flow.



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10 Questions to Ask a Potential Investor Client

Because there are so many different types of investors out there, it's important to learn what kind of investing your client prefers. After all, staying on the same page is vital to building a lasting business relationship. 

A brief note: If you are dealing with a brand-new investor, they may not have the answers to all these questions. Many real estate agents avoid newbie investors like the plague, because they waste everyone’s time and end up with no results. It is up to you, obviously, how long you want to work with these investors.

Keep in mind, however, that we all have to start somewhere. Had my first agent not helped me through my first deal, I would have been completely lost. The following questions should help both you and your client find out what your client knows—and BiggerPockets can be your backup support team. 

What’s your experience?

Start the discussion with a new investor client by simply asking about themselves. What's their investing experience? Did they just get out of a hype-filled weekend bootcamp where they were sold pie-in-the-sky dreams? Do they have a real estate, finance, or business background? Have they done their homework—frankly, do they even know what they are talking about?

Real estate investing is more of a “business” than you might think. The best investors have serious business skills. Look for investors who aren't afraid to read a business book and can carry on a conversation about running a successful business.

What’s your end goal?

This question should come early on. An investor without a clearly defined end goal often can't decide what kind of investing they want to pursue. For example, if an investor's goal is to continue working but retire in 10 years from passive income, then flipping houses is probably not their ideal strategy. If quitting their job next month is the goal, flipping might be just right.

By understanding the big picture, you can anticipate the kind of properties they may be interested in and the kind of services they may seek. Don’t be afraid to get personal if you feel comfortable. What do they dream of doing 10 years from now? What kind of legacy do they want for their children? These are important “big picture” questions to know, so you can help your client achieve their goal more effectively with you by their side.

How are you financing your investments?

Financing can be a frustrating part of dealing with investors. Knowing how the investor plans to finance their investments is key. Have you ever worked with an investor, only to have a deal fall apart because they couldn't line up the financing? It happens frequently because many investors' eyes are simply larger than their checkbooks. Many investments require creativity to close the deal. Others only require a simple bank loan with 20 percent down—or even 100 percent cash.

What strategy (or strategies) do you use?

From wholesaling to flipping to buy and hold, understanding the way that your investor client makes money is important to understanding how you will make money. Knowing the investor's specific strategy determines what other questions you should ask. It also provides a better understanding of what kind of services the investor might need.

What kind of investment properties are you looking for?

Next, the obvious question: “What are you looking for?” There are numerous different niches, from single family homes to multifamily to commercial. Then, each of those niches has numerous sub-niches. Most investors have a fairly narrow field of pursuit.

For example, currently I am pursuing small multifamily properties with between two and four units that can provide $200 per unit per month in positive cash flow. Knowing the precise property niche and sub-niche is extremely important, so be sure to narrow this down with your investor.

How much do you want to spend?

Is the investor looking for multimillion dollar homes or small starter homes? A high- or a low-end multifamily? Within every niche and strategy there are many different price points—so understanding what your investor wants to spend is helpful in deciding what to look for.

Additionally, this question will help you better-understand the kind of investor you're dealing with. If your investor wants starter homes in the $100,000 range that don’t need much work, but the lowest price houses on your market are in the $300,000 range, they may not have a strong grasp on what is available or may be looking in different neighborhoods than you currently serve.

What neighborhoods are you looking in?

Speaking of neighborhoods, most investors have places they enjoy buying in and places they would never consider. Typically, most investors are not looking in the fanciest parts of town—though some are—and most aren't looking in rougher areas—though again, some are. Most are looking for something in the middle. Ask your investor where they plan on buying or selling and what areas are out of the running.

Who's on your team?

It’s a good idea to know who your investor is working with. Even if they're a one-person operation, no investor can do everything alone. Ask if they have teamed up with—or started searching for—a:

  • General contractor
  • Lender
  • Property manager
  • Attorney
  • Insurance agent
  • Accountant
  • Escrow/title representative.

By looking at your investor's team, you can see where you fit within their needs and maybe find other great sources for leads and referrals.

How many offers do you plan to submit?

We’ll cover in more detail later. This important question outlines exactly what you will need to do, as the investor's agent. Some investors submit hundreds of offers. Others only submit one each year. 

This is also a good time to learn your investor's offer philosophy. Are they throwing noodles against the wall to see what sticks, or are they seeking out only the best properties and going after them will full force?

What do you need from me?

Rather than trying to determine how you can best help your client, ask them this question. Many investors already know what they want. Some investors may only be looking for someone to send over deals. Others may be looking for someone to show properties and submit offers. Others may be looking primarily for a sales agent. If you don’t ask, you won’t know.
How to Become a Real Estate Agent: An Investor's Guide

Helping Your Investor With Financing

A great real estate agent does more than just open doors and submit offers. A great real estate moves a client forward through every stage of the process. As such, I believe all investor-friendly agents should be well-versed in creative financing.

First-time home buyer clients typically take out either an FHA loan or a conventional mortgage, so this is where most real estate agent education ceases. Many agents lack the know-how to help clients who don't qualify for a conventional mortgage. However, you're reading this guide because you don't want to just be an average agent—you want to be a great agent.

There are multiple financing strategies to tuck in your bag of tools. Not every financing strategy works in every case, but by familiarizing yourself with the different ways investors finance deals, you increase your own ability to serve clients and close more transactions.

Conventional residential mortgages

Agents deal with this option every day—though conventional mortgages offer unique twists for investors. Typically, these loans require 20 percent down and are notoriously inflexible, because they need to conform to Fannie Mae or Freddie Mac standards. For many real estate investors, the conventional loan is the best-case scenario, because it offers the longest terms and the lowest rates.

Conventional mortgages can typically be used to finance single family rentals, duplexes, triplexes, and quadplexes—but loans on properties with more than four units fall in the "commercial" loan category, which we'll cover in a bit.

Due to restrictions from Fannie Mae and Freddie Mac, investors are limited with the number of conventional mortgages they can have—usually four, though sometimes up to 10, depending on the bank and the borrower. However, debt-to-income issues mean many investors don’t even make it to the four loans before being denied a mortgage.

In a perfect world, conventional loans would be enough. However, most active investors don't use conventional mortgages for the bulk of their investments. That's why understanding other creative financing techniques is imperative for an investor-friendly agent.

FHA loans

You already know about FHA loans, but many agents don’t realize that they can also be used for small multifamily investment properties up to four units—when the investor lives in one of the units. In other words, Investor John can purchase a fourplex for just 3.5 percent down with an FHA loan, as long as he lives in one of the units upon purchasing. This is a popular method for new investors to get into the game with limited funds and begin building wealth through appreciation and cash flow.

Keep in mind, however, that an investor can only have one FHA loan in their name at a time. Thus, this isn't a strategy that most large active investors can use.

203K LOANS

A subset of the FHA loan product, the 203K loan allows homeowners to wrap needed home remodeling into the cost of the property purchase. This can also be used for small multifamily properties when the owner lives in one of the units. Although the red tape can be a little cumbersome, when used correctly the 203K loan can be an awesome tool to help new investors build immediate sweat equity.

Portfolio loans

Portfolio loans are loans that are not sold to Fannie Mae or Freddie Mac—and thus don't necessarily abide by the same strict standards. They're generally more flexible. Many small community banks offer portfolio loans and are able to customize a loan program for either a homeowner or an investor. To find a lender who specializes in portfolio loans, an investor simply needs to pick up the phone and start dialing. Most portfolio lenders are not shy about their loan programs.

Keep in mind, however, that just because a portfolio lender is not required to conform their loans to Fannie Mae or Freddie Mac guidelines doesn’t mean they are less conservative in their lending. They simply have more flexibility. For example, some portfolio lenders may not abide by the “four loan maximum” that conventional loans have, or perhaps they may have different down payment requirements or the ability to collateralize other investment property to make a deal work.

Commercial loans

Commercial loans are designed for either commercial properties or residential properties with more than four units. Like a portfolio loan, a commercial lender has additional flexibility in the terms and structuring of the loan—though you can typically assume higher interest rates and lower term lengths. Where most residential loans are amortized fully over 30 years, a typical commercial loan is amortized for a maximum of 25 years but with a balloon payment due after five or six years.

Most banks and credit unions lend commercially, and there are numerous large commercial lenders and brokers that deal with only commercial loans.

Hard money

Maybe you've never heard of hard money before. You might picture a mobster sitting in his smoky bar, waiting for the townspeople to pay back their debts. However, a hard money lender isn't some enemy looking to rob you, but simply a tool used by many investors for short-term financing.

If you are unfamiliar with hard money, this might shock you. Consider sitting down. Typical hard money carries an interest rate between 10 and 15 percent, depending on the lender. However, before you start screaming “extortion” and file a complaint with your state government, understand that this type of financing is not for homeowners or those in trouble. It’s simply a business expense for many investors—especially house flippers. Because the term length is so short (typically less than a year), the high interest rate doesn’t actually affect the deal that significantly... unless the home doesn’t sell quickly.

Additionally, hard money lenders generally charge fees known as “points” (a point is one percent of the loan amount). Sometimes, these are paid upfront. Sometimes, they're wrapped into the loan. Depending on the lender, a borrower may pay between one and 10 points.

HARD MONEY LOANS: Example

Investor John is looking to flip a house, but doesn’t have all the money he needs. So he talks with a hard money lender who agrees to fund the cost of acquisition if John funds the repairs. The purchase price is $100,000 and the hard money lender charges 12 percent interest with three points wrapped into the loan. Therefore, the total loan amount becomes $103,000 with a monthly interest-only payment of $1,030. 

John hires contractors to fix up the property using his $40,000 in repairs and sells the property six months later for $190,000. In total, he paid just over $6,000 in fees and interest on the money. Yes, this is expensive, but it was all factored into the numbers when John did the deal. Without the hard money, John may have had nothing. 

Hard money lenders are also not difficult to find, because BiggerPockets contains the web’s most comprehensive hard money lender directory.

Hard money can be one of the most risky ways to invest in real estate, so be sure your client has a solid deal before recommending the use of a hard money lender.

Private money

Private money is similar to hard money in many respects, but is distinguished due to the relationship between the lender and the borrower. Typically with “private money,” the lender is not a professional lender but rather an individual looking to achieve higher returns on their cash. They may be a family member, friend, or co-worker, and are often less business-oriented than hard money lenders. Private money usually has fewer fees and points and term length can be negotiated more easily to serve the interest of both parties.

Private lenders lend cash to buy property in exchange for a specific interest rate. Their investment is secured by a promissory note or mortgage on the property, which means if your investor doesn't pay, they can foreclose and take the house, just like a bank or hard money lender. Private lending interest rates are usually established up front and terms range from six months to 30 years.

Equity partnerships

If your investor client can’t finance a property on their own, investors may consider finding a partner who can make the deal happen. The partnership can be structured in a number of ways, such as:

  • Both partners split funding and pay cash
  • One parter supplies all the funding needed and purchases the property for cash while the other manages and does repairs
  • One partner supplies the down payment, the other finds a mortgage
  • Both partners supply the down payment, but one partner gets the mortgage

There are numerous ways to structure a deal like this but be sure to advise your client to seek legal assistance when setting up the partnership. Partnerships can be a great tool, but only when used properly.

Owner financing

Finally, owner financing can be a easy way for a real estate investor to fund a deal. While most sellers will not agree to seller financing, many still do. Keep in mind, also, that a seller may not need to finance the entire cost. A seller may finance a small portion, allowing the investor to take out a bank loan for the rest.

Generally, a seller should own their home free-and-clear before selling with seller financing, to avoid a mortgage's “due on sale” clause. However, this is not a legal requirement. Although the due on sale clause gives the bank the right to foreclose, it does not mandate it. The process of buying property in this way is known as “subject-to” financing and is used by many investors to buy property.

These financing strategies are some of the most common—but are definitely not the entire list. Investors explore different creative financing options throughout their entire career. As an agent, you don't need to fully understand the entire process. But by having a general understanding, you become a more valuable asset to an investor’s team.


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Making Offers for Investors

By far, the largest complaint I hear from real estate agents about working with investors is the annoyance submitting too many ridiculous offers. I completely understand. 

For an investor, making offers is largely a number’s game. For example, one deal will land for every 10 offers made. But agents feel their time is wasted submitting worthless offers—which can hurt an agent’s credibility among peers, too.

Clearly, agents and investors should have a conversation before the first offer. How many offers do they want to make? Some investors throw ridiculous numbers out there, just hoping one in one hundred sticks. Other investors only offer on the most viable deals. It’s up to you what kind of investor you want to work with, so decide for yourself what you will and won’t do and let them know up front.

Just keep in mind that most investors are not the “see what sticks” type.

Investors help you make more money with fewer clients. But if you are spending significantly more time on their deals, that partnership may not be worth it. Just be upfront with your client on what you will and won’t do from the start, and you’ll have a great working relationship.

Whether your investor client offers on dozens of properties a month or just a small few, either way you’ll still submit more offers than with the average homeowner. However, there are two reasons why this might not be such a big deal.

  • The formula: An investor typically follows the same formula for every offer. For me, its all cash, 20 day close, seven day inspection.  My agent knows this, so the process is streamlined. And because I submit so many offers, my agent and I don't need to meet every time I make an offer. Our conversation typically is done over text message.
  • New technology: Submitting offers is easier and faster than ever before. Submitting an offer can be as easy as emailing a contract to your client, having them e-sign on their iPad, and submitting the offer within minutes, not hours.
An experienced investor is not simply blindly throwing out wild numbers trying to see what might happen. Most seasoned investors have done their math and determined a price that makes sense for them, and know from experience how many of their offers get accepted. Yes, it may seem like a lot of offers—but there's a strategy behind the madness.



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Selling for an Investor

In addition to submitting offers and helping investors buy, agents also sell properties for investors. Here's what's unique about marketing these properties.

Don’t exaggerate

First, it’s important to state an obvious truth: Don’t exaggerate the after-repair value.

In other words, when dealing with an investor, let them know the reasonable price a property will sell for—don't cite a higher price just to convince the investor to work with you. Working with an investor can be a career-changing move because you'll earn multiple deals. But if you exaggerate prices, you may lose that client forever.

Speed is the priority

Many investors care about one thing above all else: speed.

When selling an owner-occupied house, the family is generally balancing “price” and “speed." Not so for investors. (This is especially true for flippers—holding costs quickly eat up profits.) Yes, price matters. Getting the highest price possible is great. However, a home sitting on the market for six months because it is priced incorrectly can be financially devastating for an investor.

Know a property's worth

Everyone has an opinion of how much their property is worth. Agents know this—they've dealt with it before, and investors are no different. You may believe that a property is worth only $150,000; the investor believes it deserves $200,000. This is why it’s essential for investors to involve an agent from the beginning. You can help the investor determine the after repair value during the purchase phase. Granted, you may not get paid for your help if the investor purchases directly from a homeowner, but providing solid data puts you in a much better position to reap the rewards when it comes time to sell.

Finding Investor Clients

Real estate investors are not hiding.

In fact, there are probably a number of investors within your circle of influence that you don’t even know about. With 28.1 million real estate investors in America, chances are there are investors in your church, your child’s PTA, your neighborhood get-together, and among your Facebook friends.  But how do you get them to work with you?

Seasoned investors are always looking for a great agent

A good agent can be hard to find—you know that. I would guess that 20 percent of agents make 80 percent of the money (there's that 80/20 rule again!). Therefore, if you want to attract investors, the first step is becoming exceptional.

I look for agents who are easily available by phone, text, and email. However, I know, you have a personal life, too—I’m not asking for 24/7 availability. I want an agent with systems and processes to smoothly manage their business. An organized agent makes everyone’s life easier. I also look for agents with solid technology skills and who understand social media.

Additionally, I want my agent to understand investing. No, you don't need to be an investors—but you should understand what makes a great investment and what doesn’t. I want them to be able to quickly assess a deal on the MLS and forward grand slams to me.

Go where investors are

When trying to find investors, you’ve got to be where the investors are! This may sound obvious, but you’d be surprised by how few real estate agents hang out with investors. Here are three common places:

REAL ESTATE CLUBS
These exist in nearly every major U.S. city in the country. Here, groups of investors get together to learn, network, and make deals. Keep in mind, however, that not all clubs are the same. Some prey on new investors, existing only up-sell expensive information and training. Others actually create a platform for new and experienced investors to network and learn.

While you can probably find clients at either, I’d recommend you focus on the clubs with the best networking abilities. Seek to provide value at these meetings. Maybe even offer to speak. Show your expertise and you’ll attract attention.

BIGGERPOCKETS
We have probably the highest concentration of investors anywhere online or in the real world—and numerous investors from your area.  To find them, there is one tool that is especially helpful: the Keyword Alert tool. Here, you can enter in certain keywords that you are interested in and you’ll receive email notifications when those terms are mentioned anywhere on the BiggerPockets Forums.

Set up keyword alerts for your city or town name. When a new member from your local area introduces themselves, jump in and greet them. Or, when investors are talking about your local area, jump in and join the conversation to establish yourself as the expert.

BLOG
Do you have a blog? Have you ever thought of creating one? If so, I recommend talking about investment properties here. This is a great way to reach new people. Talk about properties and strategies, interview local celebrities, highlight the best local restaurants and neighborhoods, and discuss trends and success stories—anything that will intrigue your readers.

Create your own investor

Even if they're interested in investing, many people don’t know where to start—so they never do. However, as an agent, you have the unique ability to help wannabe investors become actual investors.

One of the best ways to do this is by simply talking about the investment opportunities on your social media.  Don’t simply show off the prettiest homes—show the undervalued, ugly homes as well!

What About CCIM Certification?

I can’t finish this article without at least touching on a very important designation that many real estate agents choose to pursue: a Certified Commercial Investment Member, or CCIM. However, rather than talk about something I’ve only experienced second-hand, we’ve asked a CCIM & BiggerPockets member, D. Scott Smith to share exactly what the CCIM designation is and why you should consider pursuing it:

A CCIM is a recognized expert in the commercial and investment real estate industry. The CCIM lapel pin is earned after successfully completing a designation process that ensures CCIMs are proficient not only in theory, but also in practice. CCIM is part of a global commercial real estate network with members across North America and in more than 30 countries. This professional network has enabled CCIM members to close thousands of transactions annually, representing more than $200 billion in value. As a result, the experts who possess the CCIM designation are an invaluable resource for commercial real estate owners, investors, and users.

CCIMs have completed a designation curriculum that covers essential CCIM skill sets including ethics, interest-based negotiation, financial analysis, market analysis, user decision analysis, and investment analysis for commercial investment real estate. CCIMs have completed a portfolio demonstrating the depth of their commercial real estate experience. Finally, they have demonstrated their proficiency in the CCIM skill sets by successfully completing a comprehensive examination. Only then is a designation candidate awarded the coveted CCIM pin, joining the ranks of highly skilled commercial and investment real estate experts.

Over 15,000 commercial real estate professionals have earned the designation. Currently, 5,500 professionals are pursuing their CCIM designation.

Numbers don’t lie—people lie about the numbers. The hard part is knowing the difference between what someone tells you and what the most likely outcome will be. You can only get those answers through a lot of hard work, research, and experience. An easier way to get them is to educate yourself and to hang out with others that have some of the experience you are looking for.

Being a CCIM has done just that for me.

It has opened doors that would not have been opened had I not done the work and put in the hours to get the designation. As a result, my clients get a world class service, literally anywhere in the world through the CCIM network and affiliates. But I have to caution you, education is never ending. You have to commit to being a life long student. Although CCIM is the best commercial real estate education, hands down, that doesn’t mean that’s it. There’s still a world of experience knowledge out their to get. CCIM just shows you the path.
Brandon Turner is an active real estate investor, entrepreneur, writer, and co-host of the BiggerPockets Podcast. He is a nationally recognized leader in the real estate education space and has tau...
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