Agents Helping Buyers Buy Short Term Rentals

To be a good agent is one thing and to be a good short-term rental (STR) investor is another; to be a good agent that helps investors become successful at buying their short-term rental that will be successful is a whole other set of skills to have as an agent. There is not only selling skills, but there are also analytical skills, area knowledge, and personal experience that makes all these key elements come together to be a success as an agent for STR clients.

While an agent is working with the clients, the clients use the agents set of skills to help them buy and sell houses that they either have lived in for a long period of time, two years on up and they have some emotional connection to the home or a connection to the home they are about to buy on an emotional level. As an investor there are black and white numbers that need to be hashed out prior to buying, no emotion, and a short-term rental investor needs to know the house works for the price to get the return on it and it’ll be profitable. In realty the property that person/investor buys for the STR needs to have many things verse just a home rental for a long-term tenant. This is the reason there are full set of different skills that the realtor needs to have to assist traditional investors buying a STR that a traditional agent does not provide. As we jump into the three things that the investor friendly agent needs to have, you should note these are three fundamental skills the agent needs to have to help the investor. There are other skills the agent needs to have for instance negotiation skills and more; however, we’ll be talking about the foundation for the STR friendly agent will need.

The Foundation Starts Here

Let’s go over knowing the area, there are many things that realtors get questioned about and most of them are challenges that people think are things that hinder the agent to be a good one. Most of the time this is not true and really something that hinders the agent to get more clients since he or she are out of the area (maybe even only 15-20 minutes out of the area). In Airbnb, or vacation rental buying would be my one caveat to this topic of discussed by picking a good agent. The reason I believe this is that most cities, counties, and areas have put roadblocks into place (in terms of laws) to slow the spread of STRs and put those property owners in a situation where they either are the only ones in the area with the Airbnb or they must follow strict guidelines to make sure they are a good host. Also, some cities have outright outlawed STRs in the city/area, so if a person was to buy there in that city, they would not be able to rent it as a short-term owner. So as an agent helping clients buy a STR in an area you need to be an area expert and law expert to make sure they are doing that right thing instead of making a huge mistake.

Most of the cities that are a sought after STR city and allows the ability to have a short-term rental for just a weekend have some rules that still need to be followed as an owner. As a realtor these are things that should be known and covered as you assist with the purchase of the property with clients. As there are many expenses that could occur if there are strict guidelines in a specific area that can cause the host/buyer to not get their STR off the ground without heavier fees that other areas they were looking. This is the biggest reason to be an informed agent particularly in this area. If there are heavy costs associate with the city a client just bought a property in then this could put them into a negative cashflow state for the year or for the property, and bar them from listing for longer than expected. Some examples are moratoriums that are unknown and just popped up to licensing fees that are higher than other areas, and monthly taxes that are higher than other areas as well.

For the second thing an agent needs to know is the ability to run numbers just like any other investor the agent should be able to spit out numbers of the area, the property and know what the investor is talking about on the topic of investing in that area and property. The agent that is going to assist needs to know even more, they need to know the Airbnb market, what draws people into that market for that house and if that house has the same thing that the clients staying at the place want. In any case of an agent helping their buyers buy a home to rent as a short-term rental they want to make sure that the new buyer will be profitable and able to make money on that property, so is that a spa in a cold weather climate or is that a pool in the warmer weather areas that will yield the most money on renting out the place. The agent needs to know these things to make it a successful purchase for the buyer.

Why are the numbers so important, this is the reason people invest. The numbers are good and make sense for the purchase. If the numbers are off, then the investor does not buy. It’s a challenge when working with an agent that just makes the offer for the clients and does not affirm the numbers with the clients to give them a second opinion to make it a successful purchase. It is a huge asset to have an agent run the numbers with the client which will bring the client(s) more confidence on the numbers and property to make the right choice for the investment. How hard is it for an agent to run numbers on a property, it is simple and quick if the agent has experience on the property and area in terms of rentals. So, make sure your professional knows how to get the numbers done.

Personal experience is needed, why is this? It’s because if there is no tangible experience for the buyer’s agent then the clients will be more in the dark for the purchase. What does that mean, well at least have an agent experienced in the investing product/property, investing in the area, managing their own or someone’s property, or been involved with a client managing their property over a period of time. This will bring so much value to those people looking at a property to invest with that deep knowledge of the process. If there is not deep knowledge then there will be a disconnect between the client, their investment, and the agent. There should be a connection between all three, and that involvement knowledge that is lacking will mess everything up!

Personal experience is key here and the skills are different because these are very active investments and there is a lot riding on so many factors of the homes. The homes can change due to the bed and bathroom count along with location. The location is not anything new especially if the house is located close to a downtown with everything is going on; however, with Airbnb’s there maybe another added benefit for some to be in the middle of nowhere that does not have any neighbors because STRs have louder guests then a normal rental would have staying at the property. The other reason that far away STRs are good are due to the unique lot size or terrain of the property, just to name a couple. All these things above dictate the price on how much the property will rent out for and what you will get back on the return of investment. This is something that needs to be discussed with your realtor whenever you are looking into a new area, which is why that personal experience is so important on STRs.

Conclusion

We covered a lot in a short post, and these are three deep concepts that go against my beliefs of buying a normal property, or a long-term investment. It does go against my normal beliefs of a realtor because if a realtor lives 20 minutes from a city and does not know anything about that city while the clients are buying it as a primary residence, the realtor can still transact that purchase without really needing to know too much. The other thing is that most realtors have experience of buying and selling, they do not have the experience of buying STRs. Most realtors may have worked with investors on investment LTRs, and know their numbers on that side, but they do not know the side of the STR numbers which are big difference. It does not go against the beliefs when the properties are going to be a STR. These are three things you should ask your real estate professional when you are looking so that they can guide you in the right way to get that cash flowing property with great returns. A bonus option of these agents is that they may know of off market deals as well that will settle all these criteria’s that make it a great property to invest in when looking for the perfect match. Off market properties are not always the best, but this is really the best way to make sure that as an investor you are covering all your bases on deals while looking.