Working With Real Estate Investors – Are you wondering what the best clients to work with are to advance your real estate career? There are many different career opportunities in real estate. While some real estate agents and brokers prefer to work with homebuyers, others decide to specialize in working with property investors. Both niches have their advantages and disadvantages, but here’s why some people prefer working with investors.
Pros of working with real estate investors
Working with real estate investors is different than real estate agents, here’s how.
1. Deals can be expedited
When you work with homebuyers or sellers, deals tend to take longer to close. In addition to having to show them more properties, regular people looking to buy a home often have problems securing a mortgage and rarely pay in cash. The situation is very different with property investors. Once they find a profitable investment property, they are ready to move forward with the purchase. The reason is that financing a rental property is more straightforward than financing a home. First of all, real estate investors find it easy to get a mortgage because they have their rental income as an additional guarantee, so lenders see them as lower risk borrowers. Second, investors have access to various types of creative financing options such as hard money lenders, private money lenders, syndication, crowdfunding, and partnerships, which is not something that homebuyers can usually go for. So, if you want to close your deals fast, you are better off working with property investors.
2. Real estate investors could be easier to work with
One of the worst nightmares of any real estate agent – whether beginner or experienced – is dealing with difficult clients. If you option to work with investors, you will avoid this issue in most of your deals. Homebuyers and sellers tend to get emotional and picky. They are either in search of the perfect home or find it hard to separate from their old home, which means that a deal can take months. Real estate investors, on the other hand, look for one thing only: a high return on investment. As long as you can find them a property which matches their budget and expected return, they are ready to buy. In many cases, they might not even want to see the property for sale if the inspection shows no major problems and the investment analysis points towards a good cap rate and cash on cash return.
4. Access a large client pool
If you are licensed in a hot real estate market such as San Francisco, Miami, New York, or Boston, you might face challenges finding homebuyers. Property prices in such markets are too high for regular people. Moreover, the high price to rent ratio means that renting a property makes more sense from a financial point than buying your own home, even if you can afford the high real estate prices.
On the other hand, these hot markets are the exact locations where real estate investors will want to buy properties to benefit from the high demand for both short-term and long-term rentals. Moreover, markets with high demand, rental rates, and return on investment will attract investors from out of state and even from outside the US. This is a much larger client pool than the segment of the location population which might be interested in purchasing a home. So, if you decide to specialize in working with investors, you will be able to attract many more qualified leads and to sell even in a strong seller’s market where homebuyers cannot compete.