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Help Investors Develop an ROI Strategy

Working with inexperienced investors takes a different set of sales skills than working with primary home buyers. You spend more time upfront with the client, getting started with research, checking numbers, determining estimated value after renovation, looking at rental caps and figuring in upgrade costs.

If you do decide to offer your services to inexperienced investors, keep these principles in mind.

Clients’ objectives will help determine their investment strategy.

You need to know how much work investor clients are willing to do and how much they’re willing to spend to turn the property into a lucrative investment. If their dream is quick cash flow, then they may have to put more effort into getting the building ready rapidly. If the goal is steady income over time, they’ll need to think more about long-term maintenance issues. Before you show one property, know “who is your investor, what are their goals, and what makes a great real estate investment in your market.

Knowledge of commercial lending is essential.

You’ll need a network of lenders who specialize in commercial and construction lending. Knowing the current rates and financing terms is as important to investors as it is to primary home buyers. Even to those who pay cash. Sometimes traditional mortgage brokers aren’t an option, so be prepared to offer different lending options.

Market knowledge leads to better investment decisions.

Besides being familiar with all the comps, you need to be out there touring homes and reviewing listings. Be investors’ eyes and ears for all that’s going on in the investment world locally, especially for clients who aren’t from the area. If you aren’t an investor yourself, read books and listen to podcasts about investing, and build strong connections with local property managers.

A good relationship with the listing agent is essential.

Negotiations can be different with investor properties. Every buyer wants to spend the least amount possible, especially when short-term profits are the goal. Develop a good relationship with the agent on the other side. The more you know about the expectations of the sellers, the better things will go. Remember, if it’s a deal with great ROI potential, your client is likely not the only investor who’ll be interested. Work quickly to help your client make the first and best offer.

You can’t be an expert on everything.

“Expert” is a term that should be used very sparingly. Be helpful but know your limits and know when to refer out to other people. Having a good team—commercial lenders, real estate attorneys, contractors, repair professionals, property managers and more—gives you confidence. You don’t have to have all the answers, but your team does.

January 25, 2023.Realtor Magazine. Help Investors Develop an ROI Strategy.

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