How to Be an Investor’s No. 1 Agent

Nurturing relationships with investor buyers can prove to be a lucrative proposition for agents

By Michelle Huffman

Adding investor sales to your portfolio can be a lucrative move for residential real estate agents—but investors come with some unique quirks.

Investor sales differ from standard residential sales in many ways, but one stands out above the rest: They’re not about emotion. Buyers don’t have to fall in love with a house, picture themselves living in it or see their kids growing up there.

“Investing is strictly about the numbers,” says Lisa Candella-Hulbert, CRS, associate broker with Berkshire Hathaway HomeServices Fox and Roach in Princeton, New Jersey. “Do the numbers work? Because if you can’t sell them on the numbers, investors will walk away, even if the property is phenomenal and in a great location.”

Becoming an investing expert comes in three stages:

• Starting out
• Staking your claim on an investor’s team
• Building your investor base

How to get started with investors

Become an investor yourself. “There’s no experience like life experience,” says Nelson Zide, CRS, with ERA Key Realty Services in Framingham, Massachusetts. By investing in property, you learn about renovation costs, property management tricks and how to ignore standard-issue advice and take an investor-specific perspective.

“When I look at a home, I think like a landlord,” says John Baker, CRS, Tumbleweed Real Estate, Inc. in Sunriver, Oregon. “Let’s say the house has marble countertops. They look beautiful, but Tommy Tenant with a hammer can do thousands of dollars in damage.”

Attend investor meetings. If you’re not ready to become an investor, immerse yourself in the investor lifestyle by attending investor meetings like the Real Estate Investment Association (REIA), which is how Candella-Hulbert got her start.

“I started volunteering to sit at the front desk and help with the meetings and created relationships with a couple of new investors,” she says. She learned alongside those early investors.

How to get on an investor’s trusted team

Once you’ve established yourself as an investor-worthy agent, the next goal is to become a trusted resource and join an investor’s informal “team” of specialists. In this way, investors can be extremely lucrative through repeat and referral business.

To get on an investor’s team, investors want to see some specific qualities.

Here’s a rundown:

Know your numbers. While investors will typically have run their own numbers, you need to be able to do the math, too, and find the investment property sweet spot in your local market.

“The lower the price, the better the ratio becomes, but you can’t go down into the junk area, so you have to know the zone,” Baker says. You also need to be able to do a simple cash-flow analysis and understand the return rate.

Be the resource they need. There’s a lot you need to know to be a successful agent for a real estate investor, says Veronica Woods, a CRS candidate with the Daniel Woods Real Estate Company in Chester, Pennsylvania. This knowledge goes beyond the real estate and rental market: Knowing investment-relevant tax codes, understanding non-bank or nontraditional financing and having familiarity with how to set up an investment business like an LLC or corporation can be important in differentiating your services.

“If you’re not bringing that to the table, you’re left as a transaction manager,” Woods says. Demonstrate your superior market knowledge. Knowing the residential sales market, as well as the residential rental market, is key. Investors sometimes make generous assumptions about what kind of rent rate or resale value they can achieve, and they base a deal on these invalid notions, Woods says.

Sometimes investors get tunnel vision and try to make the lowest offer possible. You have to be able to stand up to your investors based on real market data and your experience, she adds.

Access to hard-to-find deals. Because MLS data is so readily available, investors are expecting you to find deals nobody else has access to, Woods says. This may mean talking to a FSBO seller, campaigning with sellers to find a house that meets investors’ demands and networking with other agents to get the right property.

Speak the language. “Learn to speak their language,” says Candella-Hulbert. “Be able to talk about ARV (after repair value), cap rates, buy-and-holds vs. fix-and-flips, financing and the language of numbers—and have market knowledge.”

How to build a client base

After becoming a seasoned investor’s agent, the best way to build your client base is to become the expert. Regardless of where you focus—segments like multifamily, single-family, fix-and-flip and buy-and-hold, or niches like property management or renovation—you want to own that space. While that will provide you with word-of-mouth clients, you can also actively drum up more business.

Develop an eye for what makes a good rental or flip. You want to bring properties to your clients. That’s why being able to run the numbers and securely command the investor’s prospective market knowledge will win you more transactions.

“When a property comes on the market that I think will make a good deal, I do a video preview of the property or a FaceTime walkthrough,” Candella-Hulbert says. “I jump on it immediately.” Having that eye for the right property for the right investor will create deals.

Create new investors yourself. “I do a lot of prospecting calls, and one of the questions I ask a lot of the people is about investing,” Zide says. “For example, I may talk about investing for your children’s college and discuss the 529 [savings plan], but also try to sell them on the positive cash flow of a long-term investment property.”

Educate others on investing. “There’s not a lot of investor education that’s run by licensed professionals,” Woods says.

This can mean running classes, but it can also mean creating YouTube videos or podcasts. Candella-Hulbert appears on podcasts for investors as a subject-matter expert.

Working with investors can provide you with a whole new revenue stream that will supplement your standard residential business, especially during quiet months.

“There’s no season to investing,” Woods says. “Investors are always on the hunt for deals.”

Sharpen your relationship with investors by attending the course Understanding the Residential Investor Needs at CRS.com/learn.

Photo: iStock.com/PeopleImages