How to Work with Real Estate Investors

By Mike Merin

REALTORS® and real estate investors are an ideal marriage. As REALTORS® we offer investors our market knowledge and pricing abilities and our knowledge of finance and negotiating skills, not to mention our contact lists of credible contractors and our frequent encounters with potential investment properties. But when it comes to working with investors, many REALTORS® are held back by murky fears of the unknown.

How can you help your investor clients be successful? Here are a few tips:

1 - Get Clients Ready to Invest

Help investors select the right property. Know the market well enough to help them pick the appropriate location, style and condition for the price they want to pay. Do the numbers with your client. 

2 - Know Your Role

As real estate professionals, REALTORS® are not licensed to give accounting advice. We can, however, recommend topics clients should discuss with a qualified accountant or attorney – for instance,  the critical relationship between annual depreciation deductions and life-of-the- property accumulated depreciation.

3 - Do Your Homework

Maximum leverage is the gospel that’s preached but it’s not what every investor believes is appropriate.

Make sure you know the tools of the trade – adjustable rate loans, conversion riders, seller financing, balloon loans – and how they work. Don’t overlook the possibility that your client will be paying for a property with cash. 

4 - Negotiate for Your Client

How do you respond when buyers ask what they should include in their offer for a property? Do you utter a memorized line like “make an offer you’d appreciate if you were the seller” or do you give them advice that matters? Most investment clients will appreciate the value of a fiduciary relationship with you, especially your undivided loyalty and complete confidentiality.

5 - Manage in the Long Term

 One of the most important decisions for real estate investors is selecting the right tenants. Helping your clients select and profitably manage tenants and properties should be done in the context of creating long-term, mutually beneficial relationships rather than squeezing out every last dollar from a property or tenant.

6 - Begin with the End in Mind

Successful investors have an end-game in mind before investing. Options include installment sales, seller financing with a balloon loan and a large number of different 1031 tax deferred exchanges. Serve investors well with skills important to them including finance, negotiating and pricing but keep alert to smart risk reduction practices as well. We can price properties but not offer opinions of value (appraise); negotiate well but not practice law; and suggest contractors and service providers but only with the appropriate signed disclosures.

Mike Merin has invested in real estate for over 20 years. His new book written specifically for REALTOR®s, Attack the Market: Invest! ®, is available at www.Students-First.com. Mike is offering these seminars at the TriplePlay Conference in December: An Agent’s Guide to Serving Investors and Negotiating Tools: Serving the Public during Multiple Offers.