Not all real estate agents are knowledgeable about after-repair values or estimated cap rates for investments. If you need help locating, sizing up, or calculating renovation costs for potential investment properties, you need a realtor that is familiar with rehabbing and rental markets in your area.
Many real estate agents are experienced in working with both buyers and sellers of traditional homes. Some agents, however, focus specifically on helping investors find homes. These agents often own investment properties themselves and are experienced in analyzing deals. They may also have access to homes that are not being publicly marketed.
9 qualities that make an agent ‘investor-friendly’
A real estate agent who specializes in primary residences helps their clients with every aspect of buying or selling a home. This includes marketing the property, negotiating with buyers or sellers, coordinating home inspections, dealing with the appraisal process, and completing the sale.
What are the top skills and qualities to look for to see if an agent is “investor friendly?”
1. Access to off-market properties
The experts we spoke to agreed that the biggest advantage of using a real estate agent is that they can find properties that aren’t listed on the MLS, including properties that aren’t even on the market yet.
The most successful investors are always looking for new deals and they want a real estate agent who can find them good ones. They don’t want to have to compete with other investors for the sameproperty.
An agent that is good for investors will always be looking for properties that their client cannot find themselves. This is according to Robert Taylor who is a California real estate investor with a lot of experience. In fact, many investors will have more than one agent working for them. Taylor says that he personally relies on two different agents. One agent specializes in properties that are owned by people who are in distress. The other agent manages and owns multiple rental properties.
Phrasing the text differently, agents who work well with investors generally have existing ties to wholesalers who are in search of homeowners who are willing to sell for cash. The agents then present these available properties to their investor customers before they are put on the market, getting rid of the need to compete against other buyers.
An agent with greater access to off-market deals can provide more investment opportunities for the buyer. This gives the buyer an edge over competing investors and allows them to connect to more lucrative deals.
2. Experienced and in real estate full-time
For agents who are just getting started or are looking to make a career change, there may be a transition period when they’re juggling real estate along with another job or schooling. This can be a difficult time, but it’s important to remember that it won’t last forever. Try to focus on your long-term goals and stay positive.
The survey showed that 49% of agents work in the industry full-time and 22% work part-time. The survey suggests that it is more difficult to be successful with a part-time agent because they do not have as much time to dedicate to the job.
An agent who completes a minimum of 100 transactions per year is typically more investor-friendly, and requires a full-time commitment, according to Matin.
3. Knowledge of micro-markets
While most agents specialize in a particular region, investor-friendly agents will narrow their focus to honing in on micro-markets – specific neighborhoods or communities within a larger area.
An agent who knows the micro-market well can provide information about local things like school districts, building and zoning regulations, restaurants, shopping, and commuter trends. They will know about the community park development on the South side of town that makes the area a great opportunity for attracting renters or which areas are going to be too expensive to buy into.
An investor-friendly real estate agent deep familiar with local markets can be beneficial to even the most experienced investors.
4. Firsthand investing experience
Many real estate agents that are friendly to investors are investors themselves. Travis Steinemann, an experienced real estate investor in Baton Rouge, Louisiana, only works with real estate investors who actually invest in their own properties.
He explains that if this were not the case, people would not be able to understand what a good deal is, as well as the smaller details that are easy to miss but can sink a project.
“I enlisted an agent without checking to see if they had any investment experience,” said Taylor. “After I bought my first property with that agent, I asked why they didn’t invest. Their response was, ‘I couldn’t ever find a way to make money investing in real estate.'”
He suggests that the fact the agent didn’t give him a heads up that his investment may not have been a wise one, was a red flag. He lost over $90,000 on the property and has learned that he needs agents who have a more vested interest in his success financially.
Steinemann notes that it is important to find an agent who has a different investment strategy than your own to avoid the situation where they may withhold the best deals for themselves.
An agent who has invested in real estate themselves can help you avoid potential problems in your own investments.
5. Skilled at analyzing a deal
Price is one important factor to consider when buying a property, but there are other numbers to consider as well, like renovation costs, taxes, and rental income.
A commercial agent would recognize that the house may be rented for $2,500 per month, which would produce $2,000 in cash flow For example, a regular agent may look at a house that rents for $1,000 per month with a mortgage payment of $500 per month and determine that it produces $500 per month in cash flow. A commercial agent, however, would recognize that the same house could be rented for $2,500 per month, which would produce $2,000 in cash flow.
The number of expenses can vary greatly when additional costs, such as taxes and insurance, are taken into account. Other, less obvious expenses, such as vacancy allowance, capital expenditures, repairs, maintenance, and lawn care, can also add to the total.
Translation: You need to find the right number in order for a property to work as an investment, and this can be tricky. You’ll likely have to look at many properties and make multiple offers before finding a seller who agrees to your terms. An agent who is investor-friendly will be willing to do this extra work, since investors often do a lot of deals in a year.
An agent that is investor-friendly can help you find a property that is profitable and also understands the hidden costs that may be associated with the investment.
An agent who is available full-time will be able to help locate properties and act quickly to negotiate deals before competing investors buy them. They will also likely be more responsive and communicative than a part-time agent who is juggling other commitments.
Benefits of Hiring an Investor-Friendly Agent
There are several reasons why hiring an agent with a strong understanding of real estate investing can make good business sense:
1. Identify Market Trends
An investor-friendly agent knows the local market and which neighborhoods may have the best deals.
Your agent can help you find the best deals for the type of property you want based on your business plan.
An agent with knowledge of the local market can help you find properties that are under the radar but have potential for profit.
2. Locate On and Off Market Listings
Oftentimes, the best deals for investments are not the ones that are publicly listed yet. This is because agents who are friendly to investors usually have connections with other local investors. This gives you opportunities to get access to listings that are not yet public or property that is owned by other investors.
There are a number of reasons why property owners might choose to sell their property privately, rather than through public channels. These reasons can include wanting to avoid having to deal with the general public or disrupting tenants with showings. Alternatively, property owners may list their rental property on sites like the Roofstock Marketplace.
The Roofstock Certified Agent Network is a great resource for investors looking for properties. The agents in this network scour listing sources, such as the MLS, and add them to the marketplace under Roofstock’s Select program. These properties are curated for their investment potential, often as they hit the market.
3. Calculate Potential Returns in the Local Market
A good real estate agent can help you estimate your potential return on investment based on local market conditions and trends.
As a real estate investor, you should already be familiar with financial calculations for rental properties, such as cash flow, net operating income (NOI), cap rate, gross rent multiplier (GRM), and return on investment (ROI). Your agent should also be familiar with these concepts.
This is an example of how you can ask your agent to look for a more profitable property. You want your agent to look for a property with a GRM of 8.0 or less. This is because the property generates more rental income compared to the price.
Your agent should look for homes that are either priced below the median property price but generate the median rental income, or for median priced properties that generate a gross annual rental income of more than $18,750. In both cases, the GRM would be less than 8.0.
4. Provide local contacts and connections
A good real estate agent for investors should also be able to introduce you to their network of local contacts.
The real estate community in any given area is usually quite tight-knit. Therefore, it would be beneficial to have someone who could introduce you to the important local players in the market. Otherwise, it could take years to build the necessary connections.
You can make your rental property more successful by knowing which lenders, contractors, and local property managers are the best.
Where to find an investor-friendly real estate agent
It can be difficult to find a good real estate agent who is investor friendly because they are in high demand. Usually, these agents have reached a point in their careers where they have so much referral business that they can be selective about which investor clients they work with.
Fortunately, there are several ways that you can find an investor real estate agent:
Roofstock
The details pages of Roofstock Select properties list the Certified Agent Network that Roofstock works with. These agents are a great resource when investors are looking for an investment property.
NAR designations and certifications
The National Association of REALTORS (NAR) offers a variety of designations and certifications to real estate agents to improve their skills working with investors:
- Real Estate Investing / REI is a certification program for agents who want to master the ins and outs of working with real estate investors, as well as those who are establishing themselves as investors;
- Short Sales & Foreclosure Resource / SFR trains agents to work with distressed sellers with pre-foreclosure and foreclosure properties that could be turned into good rental property investments; and
- Certified Commercial Investment Member / CCIM is commercial real estate’s global standard for achievement. Although originally created for CRE professionals, the single-family rental (SFR) asset class is attracting more interest from commercial real estate practitioners.
Property management companies
You can find an investor-friendly real estate agent by contacting a property manager and asking the management company for a referral. Local property managers work with investors and real estate agents and may have a current client who manages rental property and is interested in selling.
Real estate investing groups
Joining a real estate investment club or group is a good way to find an agent who is willing to work with investors. You will also have access to resources that can help you learn more about the business and make connections.
Some of the best ways to find a real estate investing group include:
- BiggerPockets’ Directory of Real Estate Investment Clubs;
- National Real Estate Investors Association (National REIA); and
- National Real Estate Investment Club (National REIC).
How to interview an investor-friendly real estate agent
Here are some of the key interview questions to ask when you speak to an investor friendly real estate agent:
- How long have you been working with real estate investors who buy [your type of investment such as single-family rentals, multifamily property, etc.]?
- Do you currently invest in these types of property yourself? [Why or why not?]
- Describe the process you go through when searching for rental investment properties.
- Do you have access to off-market or pocket listings, and if so, how often do they become available?
- How many clients are you currently working with, and are your clients in-town or remote real estate investors?
- What is the average length of time your clients have been with you?
- May I contact one or two of your clients and speak to them about your services?
- Are you able to make referrals for a good property manager, real estate attorney, lender, escrow officer, or contractor if I need help with these?
- Do you provide other services besides real estate?
- What is the best way to communicate with you? [Phone, email, text, etc.]
