3 Ways to Create Your Own Inventory as a Real Estate Agent

by | BiggerPockets.com

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You wouldn’t be here if you didn’t think you could be successful.

But this business is hard, and it can be difficult to make a name for yourself.

Maybe you’re a real estate agent looking to expand your portfolio a bit. Maybe, as you’re taking your buyers from home to home you can’t help but think to yourself, “If I bought this home, I could fix it up and sell it for a bit of profit. Easily.”

Maybe your buyers are having a difficult time finding the right home in a tight market. You can’t help wondering if you could lead the market by purchasing homes for cash and placing them for sale, increasing the amount of available inventory.

Guess what? You can. As an advisor with Cole Realty Resource, I’d like to share the following ideas around how to market yourself in the most impactful ways.

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3 Ways to Create Your Own Inventory as a Real Estate Agent

As a real estate agent, you have the market at your fingertips. With a quick map search on an NMLS-type service, you can get a look at the climate of the market.

You also live by your commissions. No closings means no paycheck. In a job that is often feast or famine, wouldn’t it be nice to have more feast? You’re the agent. You know what your buyers are looking for. You are practiced in getting listings.

Why not take those skills and create your own inventory? Here’s how. 

Related: 5 Ways to Work Less and Get More Done as a Real Estate Agent

1. Use your resources.

You have a wealth of knowledge at your fingertips. While many investors may be stuck using public domains like Zillow and Redfin, part of your real estate dues should give you access to some sort of national or regional listing service. The information hits these services hours and sometimes even days faster than it hits public access. So use it.

Keep up-to-date with what neighborhoods are “hot markets.” Save a few map searches and pull the addresses into Cole Realty Resource to get email addresses. Create email flyers for the different neighborhoods that catch your eye, encouraging folks to consider an easy cash offer. You’ll most likely reach someone who sees homes going up for sale around them but isn’t able to or interested in fixing up their own place to sell. 

2. Make friends.

Walk areas adjacent to trendy neighborhoods and meet the neighbors. Ask if there are any eyesore properties in the area. If you have the address, you can look up the property-owners’ cell phone number in Cole Realty Resource to begin the conversation about a cash or investment offer.

Neighbors can be surprisingly helpful when they realize you care about restoring properties around them, helping their home values and neighborhood quality.

Build relationships with local companies so you know who to depend on when you need work done to the homes you’ve purchased. Ask contractors if they know of any properties nearby their current projects that could use some love. They’ll keep an eye out for leads for you when they know you might be making an investment that could bring them steady work.

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Related: The 4 Biggest Benefits of Having a Website as a Real Estate Agent

3. Do your research.

Become familiar with your lenders. Get to know when your county tax board holds its auctions. Learn about the foreclosure process.

Many lenders have officers dedicated to home purchasing grants while others specialize in rehabilitation and renovation loans while still others focus on how to maximize your borrowing abilities if you plan to sell the property for a profit.

Not interested in borrowing? Check out your local tax franchise board’s website and see which homes are coming up for property tax default. Most counties hold auctions once or twice a year on the courthouse steps. Addresses are often posted beforehand so you can do a drive-by of the properties—but remember not to enter the property since that’s trespassing.

Check out the pre-foreclosure market. Owners in these situations may be more inclined to accept an all-cash offer.

Establish yourself as an expert in creating inventory, and you may even find yourself approached by other agents to work on distressed properties together.

Ultimately, be the visionary that looks at a real estate market and refuses to accept it at its current state. Be the change that builds your portfolio.

Cole Realty Resource has a 70-year history of providing contact information (including cell phones and emails) for a specific property or entire neighborhood, which means more meaningful conversations about buying and selling real estate. Because of your relationship with BiggerPockets, you can now get access to unlimited home phones, cell phones and emails—all tied to a specific address and all at a discounted rate. To start getting contact info within minutes, click here.

Any tips you’d add to this list?

Comment below!

About Author

Stuart Mcarthur

Stuart McArthur is technology specialist with 13 years of experience providing consultation to clients ranging from governmental entities, to corporations, to individual real estate agents and investors on how to use technology to fuel their business. With the explosion of data over the last 10 years you have to be able to use harness this data through cutting edge technology to gain a competitive edge.

7 Comments

    • Cindy Larsen

      Imagree about the risk of flipping: it assumes forced appreciation and a quick sale which may or may not work, depending on the market, and the rehab done. Also, if you buy, and then sell again less than a year later, you will have to pay capital gains tax, amd holding costs and sales costs, which could wipe out your profit from the sale. Also, if you are NOT a real estate agent you will have to pay comission to both buyers agent and sellers agent. And, of course there are the taxes and fees the seller has to pay in order to sell. A short term sale will result in these costs:
      Costs associated with buying, and holding until you have rehabed and sold:
      ( inspections, appraisal, points, taxes and fees, downpayment, mortgage payments) +
      +Rehab costs
      + Opportunity cost, while your money is tied up in the property it is not earning a return
      + Costs associated with selling: 5% of Sales price for real estate agents, + taxes and fees
      + Minimum of 20% of gain for capital gains tax

      Make sure you factor in all of these costs before you run out to fix and flip a property.
      Simplistic off-the -cuff example for a $300k house, just to get a ballpark
      Buying costs: inspection $500, appraisal $500, no points loan so interest rate is 4.5%
      loan origination fee $1000, taxes and fees $300, downpayment of 20% to avoid
      paying PMI is $60,000. Total buying costs: $62,300 of which $60,00 is equity.
      Holding costs: Set aside money to cover holding during rehab and selling.
      6 months mortgage payments on $240k @4.5% = $7296.24 of which $1914.14 becomes
      equity, and the rest is interest ($5382)
      6 months property taxes, 1/2 of $3000/year = $1,500; 6 months insurance $500
      6 months utilities guestimate $1000 so total holding cost is aprox= $10,300
      Rehab costs: simple cosmetic rehab: paint, flooring, kitchen remodel, minor bathroom
      remodel: $20,000
      Oportunity cost: so, we have put $62,300+ $10,300+ $20,000 = $ 92,600 into the deal.
      If we had that money in savings at 1% interest for the six months we would have gained
      $463. We lost that interest, So our total into the deal so far is $93,063 of which $61,914 is equity, so, we have spent $31,149, which we hope to get back when we sell.
      Sales costs: its a hot market, and our $300,000 property is worth $350,000 after we fixed it up. So our sales costs will be 5%x$350,000 = $17,500, and our taxes and fees as the seller are, say $500, making our total sales costs $18,000. Total cost, not counting equity is 49,149.

      So our capital gain is $350,000 minus our basis of
      $300k purchase + $20k rehab + $2,300 buying costs + $18k selling cost = $340,300
      So capital gain is $350,000 – $340,300 = $9,700
      We then have to pay 20%x$9,700 = $1940 in capital gains tax making our totoal invested
      Adding the Capital gains, our total cost, not counting equity is $51,089. Lets call this the
      Flipping Cost = $51,089

      So now, how much money did we make on the flip?
      We got $350,000
      – $238,085 we need to pay off the mortgage
      – $51,089 Flipping cost we spent.
      – $60,000 downpayment
      = $826 profit

      Flipping hardly seems worth it. Clearly flippers need to minimize their rehab costs. Imagine if we had paid a hard money lender 8-10% to borrow $112,000 for six months, Instead of paying the downpayment and flipping costs out of our savings.

      Of course, as a real estate agent, you save on both the buying and selling comissions, so you make an extra $13,000 in comissions. I can certainly see Stewart’s point that creating inventory of houses to sell is a good thing..

  1. Tim W.

    I don’t know how it is in other states, but be careful if you plan on doing some of work or handling subs directly. That is a job of a GC, and in Arizona that can get you into trouble, unless you have a GC rehab license. Even swapping out a ceiling light for a ceiling fan requires a permit in some cities.

    Watch out for licensed trade work (plumbing, carpentry, electrical, roofing) as these can, and usually will, be looked up to see if proper permits were pulled. Cutting corners on these jobs almost never worth the risk.

    That being said, all for rehabbing. Flipping the contract can be easier, no sweat $, but if the project shows an even bigger spread doing it yourself or adding it to your portfolio, swing for the fences!

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