How to Work with Investors!

I get questions from other agents all the time on how to work with investors. I'm an investor and the majority of my business is with investors, it's been great for me!

There are a few major things that are keys to successfully working with investors that I'll cover in this article that can make it a win/win for both parties.

Be an Investor

If you're going to work with other investors or beginning investors you must be an investor. On top of being a well educated and proficient realtor being a successful investor can help you add so much to your clients investing game. Being able to answer questions, identify a good investment and tell them what to run from are some of the benefits. Even the simpler subject of being able to add bedrooms and what that takes can turn a bad investment into a good one is huge.

Don't be afraid to submit lower offers

I always encourage my clients to make offers based on their numbers, not just to try and buy a house. Buying rentals is cool and all, but what if they don't cash flow? At the same time you don't have to steal every deal. I've purchased properties at list price that have ended up being great deals, but my analysis of the property showed that. BP has great calculators that help you determine whether or not the deal will work. Just pay for them, they're worth it! In most cases those pro formas don't support the list price in which case you'll have to make a lower offer. If you want to work with investors get used to making lower offers. I get asked all the time, are there still deals on the MLS? More often than not they aren't at list price, but you never know the sellers motivation. I've purchased all of my deals off of the MLS. 

Be prepared to write lots of offers

I prepare buyers for the search before we start so they don't get discouraged when it doesn't happen quickly. In my market it takes 3-6 months and roughly 5-7 offers to get a property. As an agent I understand this is a lot of work. Prepare yourself and be ready to work when taking on an investor as a client!

Understand their goal is to make a return, not just get a house

Referring back to submitting lower offers. An investors goal is not to just buy a house, it's to make a return that is tied to a larger why! This why may be to provide for their family, retire early or be able to try new entrepreneurial ventures. This is much different than someone who's buying a house to live in for a long period of time and understanding this is the key to helping an investor.

Understand how to add value to a home

Know what increases the value of homes and rentals in your area. For rentals this can be nicer finishes, amenities, added bedrooms, updated bathrooms and kitchens, in unit laundry, dishwashers, pet friendly rentals, etc. Know the rents in your area and know what adds to them. Some renters will pay a premium to have their pets with them. Some absolutely don't want to leave their unit to do laundry. In most cases bedrooms will add rent but know your local laws. In Minneapolis you need a special license to have more than 4 unrelated people in a unit, so if you're in an area with younger professionals a 6 bedroom unit would be almost useless. Conversely in section 8 rentals with large families the smaller bedroom units can be a detractor. I know people that do section 8 rentals with 9 bedroom units that rent for $3500.

If you're a realtor and aren't investing you really aren't doing yourself justice and planning for your future. Start investing yourself and before long you'll be able to better help investor clients!