INVESTOR/REALTOR, what is your business Plan?

Question

Hi BP

first off, thank you!!! getting my license was the best move ever as an investor.

HOWEVER, I would like to know what YOU (investor/realtor) do with your license??
How much of what you do is investing? how much as realtor?

Without going into details, I think I am good at what I do at helping investors.

HOWEVER, it's not making me any $$ and it's making my brokerage frustrated at me LOL

They want me to remove the INVESTOR part of my business and become a REALTOR.
They say if I spend as much time with regular buyers/sellers I would be making $$.

According to them, investors are "blood sucking vampires" that want everything for nothing.

I became a realtor bc I couldn't find a REALTOR like me hahahaha.

What I am doing now is no different with I was doing without a license, and I wasn't getting paid.
This license is only a tool that makes me more in tune, efficient and it open doors.
I have also met other investors and learnt so much about their strategies, and techniques that I found priceless. LOL to NO BENEFIT TO MY BROKERAGE.

If I do a deal a year my license is paid for.

I think I need to move to a more investor-friendly company.

So that:
* investor would want to work with me more
* I can be more flexible with how I help distressed seller.

anyways, I more interested on what you have to say.

thanks in advance

Jeff Clawson · Answer

Jennifer,

Our brokerage was specifically formed for investors. I worked as a traditional agent for another brokerage for years. Once I started working with investors, I decided to focus on that and started my own brokerage. If your current broker doesn't want you to work with investors, you should look for another brokerage that specializes in investment properties or start your own.

Here are the reasons that I prefer working with investors over traditional buyers and sellers.

1. The average investor buys a house every 2 years. The average homeowner buys or sells a house every 7 years. 
2. There is very little emotional attachment in the transactions. If the numbers work, then the investor will move forward. They can see past the shag carpet and pink paint.

Many of my investor clients started with buying $100,000 homes and duplexes, but a few of them are now buying $1,000,000 apartment complexes and commercial properties. It takes some time, but when you build a good investor client base, you can literally sell as many properties as you can find and your income potential is limitless.

Do not work for free. You are going to be making your clients a lot of money. They should see the value in the opportunities that you are presenting to them and should have no problem paying your commission when you bring them a good deal. If they try to negotiate your commission out of a deal, then do not send them anymore deals. There are a lot of investors out there that would love to see your deals and are happy paying your commission, as long as they meet their goals. Only work with clients that see your value.

Also, as Joel Owens suggested, work with investors that have cash or can provide proof of funds with traditional financing. You will encounter a lot of investors looking for all kinds of creative financing, mortgage assignments, wraps, lease options, because they don't have any money. While some of these deals can be successful, many fall through. Don't waste your time. Focus on the solid deals.

Also, you might consider starting a property management company. 
Many of our clients would not be investing in real estate if we were not managing their properties for them. They are simply too busy to get maintenance calls or try to collect delinquent rent. They want an investment that they can put their money into and then see a return with little to no effort. The majority of investors want passive income. If you cannot provide this, then they will just keep their money in the stock market.

If you cannot start your own property management company, then partner with a good one. Let them know that you will be sending them business and that you expect the same in return. try to find a company that does only property management and not sales. You don't want them stealing your clients. Many companies will sign a non-compete referral agreement with you.

Finding investor clients is fairly easy. Your best clients will be the ones that you have already done business with. They know you and trust you. You can also add investors to your database from the tax records. it is very easy to locate all of the investors that currently own multifamily or non-owner occupied homes through the tax records. Start marketing to them, and you will see your database grow.

Jesse Rivera · Answer

I don't agree, and it might be a state thing. When I am representing another, which requires a license, then I am working on behalf of my brokerage. But if I am a principal in a deal, then I am working for myself. I am held to a higher standard, and my broker is required to check and sign all paperwork, but the check  goes to me, and my broker gets no cut.

But my brokerage is VERY investor friendly, and I know most are not. It is a different animal, and a different mindset. I would suggest finding a broker that understands and supports my business model.

Ann Watkins · Answer

Jennifer Lee Hi Jennifer,

This is exactly why I went with a transactional brokerage right off the bat. I didn't want a big name firm dictating what I could or couldn't do with my license. As most brokers would want you to be doing a certain amount of cold calling or knocking on doors all day long to get listings.

I initially started off buying for my own account, but then found all my friends and family wanted me to help them find good deals too.

With my first brokerage I paid $179/yr and then a $150 transaction fee every time I closed a property. Strangely enough, by just dealing with folks who sought me out, my referral business grew and I started getting serious buyers and sellers due to word of mouth.

Jennifer Lee · Answer

Hi Jeff!!

Thank you, that was very good insight.
Your reasons for working with investor is the same as mine.

You have given me a lot to think about.

Thank you for putting the time and effort in responding to my post

Jennifer Lee · Answer

Good point!!

@bill
 I focused on more profitable plates and now I might have a first time home buyer willing to spend a good $$ in area I flipped. Too bad she missed my house by a month, it would have been exact match.

I'm also going to sit my first open house this wknd.

Until I built up my capital, or figure out my project, I'll play realtor ;)
I like to do different things. I have residential and commercial (retail) rental currently. I have done 2 flips, bought new construction as live in flip.

Now I'm debating on a medical building/office rental, or vacation rental.
Been approached to be a part of a shopping mall, and a downtown rejuvenation project ;) but that's too $$$ for now

@joel
 I spoke to our resident commercial guy, he said the same thing ;)
I spoke to my broker too, she said the same thing.

After my post, I looked at my clientele and realize none were "profitable" and the ones I lost, I didn't spend much energy.

@Trent 
I sure did learn a lot from my investors, great source to have.
I also decided to stay, I thought I would like to be able to provide "creative" solution.
But not at the cost of my license. 
Also I'm too new to know all the rules and regulations. If I was in a more "flexible" brokerage, I might be in an orange jumpsuit. Lol

Joel Owens · Answer

I do have my own commercial brokerage.

The broker is responsible for everything you do in relation to real estate activities. You are doing real estate ON BEHALF of the brokerage and qualifying broker. The business is not your own to decide what kind of deal you want to cut with buyers and sellers.

The broker has a brokerage for very different reasons then why you became licensed.

If you are looking for investors houses at 50k sales price and regular home buyers are buying 250,000 houses in your market then of course the broker wants you focused on that. More money on the split for the brokerage and less liability working with home buyers on vanilla deals than a bunch of hair brained type ideas some investors will come up with to make money.

Brokerages do not want that type of liability or spotlight on themselves from the real estate commission.

Real estate commission is like the IRS. You want to be in compliance with the rules and regs but do not want your business on their radar for the wrong reasons.

I had about 50 agents at one point. I don't take on anyone anymore. I do commercial real estate deals and my own investments with no agents.

An agent selling a 50,000 house to an investor would be 3% so 1,500 in total commission. 20% of 1,500 to the brokerage is only 300 bucks for a lot of drama and hand holding to make sure the agent stays inline and doesn't create a mess. Ultimately when things go wrong they always call the head broker to clean it up. So then I am helping to do the transaction for them for a measly 300 bucks.

I make 100 to 200 times over that or more on each of my commercial transactions that I do myself. I just do not get excited about having any agents these days. I think you will be fine working with investors as long as you have the brokers approval and you stay within written guidelines meaning regular cash or finance sale transactions. Too you if you do something really bad that investors call creative you might just lose your license (talking agents in general and not you specifically). The brokerage can lose their livelihood and reputation that they have built up over decades. New agents never seem to grasp ahold of this concept. It's the "oh well" mentality for many of them.

You will find a lot of these CREATIVE type investors who do not have much money. Investors I work with we still structure the debt for the best leverage and cash on cash possible but no crazy out there stuff that has a 1 in 1,000 chance of happening. My clients typically have hundreds of thousands to millions in cash or more to work with for commercial properties. Residential has a very low barrier to entry so if you have 5k to 10k and a job you might can buy a cheap house.

As an agent you have to decide if you want to put 30 offers for a client to make 1,200 if you are lucky or do you want to work on larger  deals and skip that all together.

Trent Begay · Answer

Hello Jennifer Lee,

I would definitely look at switching brokerages if you want to do more of the commercial side.

I just got my license and it really is a smart move! Do real estate deals for extra pocket money while making much more informed investment decisions, truly win win!

In addition when you help investors repeatedly you learn a lot from them and when you make them money they usually like to return the favor.

Although if you work for a commercial brokerage it is harder to build a book of business, agents are sharper and more aggressive, and it can become pretty hairy if something out of your control delays a contract or something of that nature, and on top of that you probably wouldn't be able to take advantage of the rise of the housing market [Lots of $$$$$$$$].

As far as consulting goes I was told by my instructing broker that in my state; It is not a real estate transaction, so I can collect consulting fees as I please as long as I am not directly tying it to a real estate transaction or as a representation of my brokerage services.  I would definitely look closely at your state laws regarding that though.

Ether way you go that license and the knowledge it represents is a valuable thing!

Jennifer Lee · Answer

Thank you!! Great advise!!
 I'm moving that direction 
My investors are solid, just no deals to be had or too competitive now.
They are as frustrated as me. Lol

I can accept any fee unless through my broker.
No finders fee, consultant fee etc. 
Is this all brokerage?? I think so

But I want to stay focus on my own path too.
Bill your advise is what I needed to hear!

What is your busimess plan. Are u a broker??

Boomer Creed · Answer

Jennifer Lee - Great topic!  I was thinking of posting this topic last night!  I am a few steps behind you at the moment though.  I am in the process of getting my license  and finding a broker.

I would like to be able to find the right mix of working with traditional buyers/sellers and investors.  My thought is to focus on the more traditional buyers/sellers first and integrate investors as I learn more about the investment side maybe after the 6 month mark of being a realtor.

Bill Gulley - great advice and insight with focusing on middle aged home buyers and introducing them to investing!

Good luck Jennifer! I am anxious to hear more on what others may have done.

Best,

Boomer

Bill Gulley · Answer

I understand the broker's point, you're in business to make money not run a charity for broke RE operators.

I doubt you find an "Investor Friendly" brokerage that will cater to those that can't really buy.

You might consider charging a fee, even hourly, for assistance and give some to the broker.

You can certainly work investors, but they need to be able to buy, not just one deal, but 20, the thing about working with good investors is that they are repeat business, but if they have to do lease options every time of get seller financing, they are not investors for a Realtor to build a business on, those deals are slim and like your broker was saying, get something for nothing, wasting your time submitting low ball offers.

I suggest you spend your time where it is most profitable, sounds like that is working with real mom and pop buyers at retail. Think too, that if you get some middle aged homebuyers with good incomes, you can approach them about investing as well, introduce the better clients to investing!

Not saying to tell the no money or little money investors to get lost, just start using your time where it is most profitable. You can always do deals with others and work on other stuff, but that needs to be in more of your spare time rather than your main business. IMO Good luck :)

INVESTOR/REALTOR, what is your business Plan?

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