Most real estate agents understand the basics of purchasing a home. They can help with key aspects of the home buying process like finding the right property, negotiation, and drawing up the deal are some of what an agent does. But most agents are focused on the emotional aspects of purchasing a home like the life of the buyer. Things that a first-time homebuyer would appreciate to get a feel for what living in the area would look like.But not all real estate agents understand what investors need. As an investor, you have different priorities than the average homebuyer. You’ll need specific traits that a generalist agent won’t have the time or know-how to offer you. If you’re just starting out building your real estate portfolio or are a seasoned vet looking to buy in new markets, the first step to building your team is finding an investor-friendly agent.
What is an Investor-Friendly Real Estate Agent?
An investor-friendly real estate agent has experience working with investors, plain and simple.
What are the Benefits of Working with an Investor-Friendly Agent?
Any real estate agent has a lot to bring to the table that will enable you to find properties and close them faster. But in competitive markets, this may not be fast enough to close the deal. By far the best agents to work with are those that are investors themselves. They understand the need to act quickly when a deal comes to market. They prioritize your deals because they know that speed can make or break a deal. The ability to treat your deal like their own makes for a great partnership where both you and the investor agent can benefit from. Another bonus (if not the biggest one) of working with an agent that is also an investor? Investor-friendly agents understand the key differences between buying a property as an investment vs buying a primary residence. If you’re buying an investment property, everything from:
- Choosing a neighborhood to buy-in
- Determining property types
- Getting financing
- Analyzing deals
- Making offers
…will look very different from the normal home buyer. Why? Your goals are different. As an investor, you’re wanting cash-flow, and a hedge against inflation, while the normal home buyer is looking for a nice place to raise a family (generally speaking). You aren’t the typical buyer for this reason. A real estate agent, who is also an investor, understands this and what you need to know to find a property that will make you money. Additionally, expect that they will work with you to understand things like:
- Most popular neighborhoods in the area
- Types demographic the area is attracting
- What residents are looking for in a local rental
- Lending opportunities, tax incentives, and deal structuring
- Make ready requirements for the property to rent ( ie. capital expenditures and operating expenditures) along with zoning
But wait—a good investor-friendly agent won’t stop there. Here are bonuses to working with an investor-friendly agent:
Get You Access to Properties in Your Buy Box
They have access to tools like the MLS (Multiple Listing Service). This gives them access to properties and key information that will help them know when a deal hits the market. A good investor-friendly agent will be aware of the local market trends, upcoming development, zoning restrictions, and school zones. They'll give you a clearer picture of potential properties before they come on the market and even make you aware of off-market properties. Their network is rock solid and are well known and liked in the community.
Advise You on Whether Renting is for You
They have a thorough understanding of the current rental market. This will help you run the numbers, determine what you can expect in cash flow, and understand the types of residents you can expect to place in a particular neighborhood. They can help with thorough rental analysis to forecasting rents and analyzing a rent-roll. An understanding of the local market is key, they can tell you which upgrades can you focus on that will enable you to increase the rent? They will guide you throughout the entire process of finding properties, making offers, closing on the property as fast as possible. One often overlooked benefit of working with investor-friendly agents is that they know local vendors, especially property managers. If you’re new to a market or investing altogether, DON'T overlook how critical it is to build a solid team. A good real estate agent will know of good property managers in your market. A solid property manager is where you’ll get the expertise on placing a resident quickly, maintenance, limiting your vacancies and maximizing your passive cash flow. (Are you looking for an all-in-one Real Estate partner with your next property? Contact our team about partnering with us in over 12 markets nationwide.)
Advise You on Investor Tax Benefits
The best investor-friendly agents can guide you through the different tax deductions available for you to capitalize on based on your property type and area. (SIDE NOTE: Agents with their CIAS designation do extensive training on 1031 exchanges. They allow you to roll over your capital gains into a new property. For seasoned investors this means pushing out tax payment as long as you keep buying new properties!)Cost segregation and the opportunity zone tax incentive are two other great deductions that you should seek out. A real estate agent that is also an investor that has used these benefits before can help you save thousands of dollars.
What Should You Look for in a Great Investor-Friendly Agent?
When on the search for the right agent don’t be afraid to ask a lot of questions. You don’t have to work with anyone that isn’t right for you. You’re a valuable client that will hopefully bring them multiple deals per year. You are looking for a partnership where you can come together so that both of you can accomplish your goals and grow your portfolio.You’ll want to find someone that responds quickly and thoughtfully. Great communication is your secret weapon to speed up deals. They should be willing to take the time to offer advice and answer any questions you might have. The important thing to remember is that you need to find someone you can trust. You need to be able to give a set of criteria to an agent and trust them to take care of it within the given criteria. Trust equals speed and speed means capitalizing on deals. Here are a few questions you can ask to find the most experienced investment real estate agent:
- Are you a full-time agent?
- Do you own any investment properties?
- What kind of properties do you own?
- What’s your niche? (house flipping, foreclosures, rentals)
- Have you worked with investors in previous deals?
- How many investors have you helped?
- How many deals have you closed this year?
- What neighborhoods do you focus on?
- What areas do you see the most potential for growth?
- What demographic is in the area vs. another and what are renters looking for?
- What sort of requests are you seeing from renters in the market?
Through your research and questions you'll want to find an agent that can prove the following:
Top-Notch Negotiation Skills
After all the effort it takes to find, evaluate, and send an offer on a property the last thing you want is an agent that can’t negotiate. As an investor, if a deal isn’t right in your buy box the deal dies. An investor-friendly agent must have thick skin. Multiple offers may have to be sent out for one to go ahead. The extra work is worth it if they can process several of your deals a year.The best leverage in a tough negotiation is trust in the partnership. The agent should know exactly what the investor needs for a deal to be profitable. That trust and knowledge allow the agent to get ahead and not fall behind in line on deals.
Experience Working With Investors
A good rule of thumb is to work with an agent that handles 80-100 transactions per year. This shows that they move fast and most likely work in real estate full time. They have worked with investors before and know how to find, evaluate, and negotiate deals fast. They know the investor lingo. You don’t have to take the time to explain to them what your cap rate is or ARV (after repair value).
Local Expertise
Local expertise will maximize your search area and help you find deals before they come to market. They know the neighborhoods inside and out. If there is development that may increase an area's desirability they know about it and seek out properties that will likely go up in value. In need of a local expert in your market? Give us a call today.
A Well Connected Network
An investor-friendly agent has a network of professionals that you can rely on to get important jobs done fast. These include but aren’t limited to contractors, insurance agents, title companies, and lenders. Why source and vet new vendors every time you close a deal if you don’t have to? They are also keyed into local investor behavior to know when they are buying and when they're liquidating their properties.
An Understanding of Common Performance Metrics
Your ideal agent understands key performance metrics from a financial perspective.These key performance metrics include:
- Cash flow
- Capitalization rate (cap rate)
- Cash-on-cash return (COC)
- Total ROI or rate of return
An investor-friendly agent will be able to help you calculate all of these as well. Further Reading: Introduction to Real Estate Investment Analysis(Quick caveat: Even if you don’t personally use numbers like cap rates for residential properties, that’s fine, but any agent who is savvy on investing should know this term and the basic workings of it.)Most importantly! An investor-friendly agent will understand how to calculate a return. If an agent can’t talk about the returns on a particular property fairly quickly and intelligently, they may not be that investor-friendly. That probably stems from the fact that that agent doesn’t have any experience with personal investments. In short, don’t sleep on the importance of working with an investor-friendly agent if you’re wanting to build a successful rental business.
Invest with Evernest
When you find the right investor-friendly real estate agent, plan on building that partnership so it lasts. It may take time to find the right agent but in the end, they can be a great asset in your total investment strategy. It’s a win-win scenario, you get early access to the best properties in your buy box and they get multiple commission checks a year without the hassle of sourcing new clients.If you’re ready to buy your next (or first) property, sign up for our Pocket Listings (to get notified of all the deals that come across our desk daily) and reach out to one of our investor-friendly agents—we would love to help you buy your next rental property investment.
