While some real estate investors may want to do their own digging and handle transactions solo, there are a lot of advantages to working with a real estate agent. However, in the world of real estate investing, not all real estate agents are made equal. To get the most out of any property, from a fix and flip to a larger rental building designed to drive long-term income, you need to find a partner who is ideal for an investor, not a standard buyer. And that is where an Investor-Friendly Realtor (IFR) comes in.
Here is what you need to know about finding a realtor partner, including what an IFR does and how the right choice can benefit your investment objectives.
What Is an Investor-Friendly Realtor (IFR)?
An Investor-Friendly Realtor is a real estate agent who specifically focuses on investment clients rather than residential homeowners. They are not trying to match buyers with a dream home; they are trying to help their investor clients make money in property investment.
The real estate landscape for residential homeowners and investors is quite different. IFRs know this, and they also know the potential for a double commission: being involved in the initial purchase of a fix and flip, and again when the property is sold for profit. These opportunities make IFRs hungry, eager, and engaged in the market – a perfect partnership for real estate investors in all spaces.
Qualities to Look for in an IFR
The average real estate agent does not have enough exposure in the investment space to provide the meaningful value, from helping to determine an estimated cap rate or keeping you apprised of the after-rehab value of prior investments in your area. These are, however, things an effective Investor-Friendly Realtor should be able to communicate as a part of your decision-making process.
If you are looking for a partner in guiding investment decisions, an experienced IFR can be a significant advantage. These are the points you should keep in mind when assessing real estate agents for investment purposes prior to your next acquisition.
Experience
Experience in real estate investing is key when choosing an IFR to work with; without demonstrated expertise in the form of supporting local investors, a title only goes so far. This means numerous years of work and many deals completed – and proof of successful transactions. You can ask to see HUD-1 statements to verify transactions, as well as check with country records offices to confirm involvement in sales and investment activities.
While most IFRs will be engaged and knowledgeable, beware of those who are looking to take advantage of eager investors. Always do your due diligence before entering into a business arrangement.
An experienced IFR will:
- Understand all costs associated with a purchase
- Use insider knowledge to find potential properties not publicly listed or that are off market
- Leverage relationships with wholesalers and other resources who are looking to sell quickly to cash investors
- Have connections to investor-friendly lenders
- Know the unique opportunities and pitfalls associated with the local market
Regardless of your objectives, there will be a perfect IFR choice for you in your chosen area. Take time to make the best choice, not the fastest or most convenient one. The wrong partner can hamper your chances of success; the right partner can help you exceed your expectations.
Experience
Commitment to the job can play a big role in whether an IFR can effectively connect investors to top quality properties.
Same with vetting experience, reviewing a realtor’s sales history can be telling. As timelines are short and the market moves quickly, successful full-time real estate agents are generally involved in dozens of transactions a year. A healthy pile of sales indicates a commitment to the job; sporadic sales indicates an IFR may have other priorities.
Knowledge and Education
Real estate is a complicated field, and to succeed, real estate agents need a deep understanding of both industry norms and the nature of the investment space. This means knowing both the micro and macro aspects of the local market and the needs of real estate investors.
When you have questions on everything from building codes to zoning regulations to ease of transportation, an IFR should be able to answer quickly and accurately. They need to know everything there is to know about the larger market and the specific properties you are considering to ensure you can make a deal that is ideal for both of you. And if they do not know, they need to have the tools on hand to look up information and present it succinctly and confidently.
Deal Analysis Abilities
There is no way around it – the ability to analyze the pros and cons of a possible deal is a must for a real estate agent working in the investment space. Understanding the nuances of what is being offered and the costs under consideration can make all the difference in determining whether a property is worth it in the long run.
Many inexperienced investors and real estate agents who are not experts in investing will focus on the high-level things, like the list price of a property, without digging deeper into all of the other elements that may play a role. Rehab costs, expenses related to lending arrangements such as hard money loans, utilities, and maintenance, for example, can play a significant role in determining whether the sales price is worth it. This is applicable on the selling side, too, particularly for fix and flippers. Realtor fees, closing costs, and other expenses associated with selling can cut into expected profits.
A traditional realtor will not be in a position to analyze the ins and outs, but an IFR can, ensuring that you only move forward on properties with a high potential for success.
Networking and Market Connections
Market understanding goes beyond the basics of real estate, like the laws surrounding local properties; it also involves the investment space as a whole, like who is buying, how the market is shifting, what the trends are for new buyers, and how neighborhoods and cities are changing.
While some of this information is available to investors, the value of a network of associated professionals that IFRs can leverage cannot be overstated. IFRs live and breathe real estate, meaning that they should know who your competition is, what resources other buyers are leveraging, what connections are in place for new and existing buyers, and how to put you in touch with experts experienced in investment properties. These experts can range from inspectors and appraisers to property managers for rental properties. Rather than going it alone and sifting through the yellow pages, the right realtor can make quick work of arranging everything you need for a fast turnaround and big profits.
Whether this is your first real estate investment or your fiftieth, the right real estate partner can make a world of difference. Keep these points in mind as you vet the professionals working in your area to make sure you find your perfect fit.