Are you looking to purchase an investment property? Whether you’re interested in a commercial property or becoming a landlord, you might want to consider working with an investment real estate agent.
An investment real estate agent is a special type of agent who works primarily with investors. They have the same real estate license and general training as other types of agents. However, they are very knowledgeable about investments in their area and usually very well-connected.
Let’s take a look at what an investment real estate agent is and how they can help an investor find the right property for them.
What is an Investment Real Estate Agent?
An investment real estate agent is an agent who specializes in matching a real estate investor with an investment property. Investment real estate agents have in-depth knowledge of real estate investing in their area. They may specialize in commercial real estate or residential real estate, or they may manage both.
They may also work with property management companies to help fill units directly. An investment agent may also work with regular, residential properties and owner-occupants — they aren’t mutually exclusive.
Someone might want a real estate investment agent if they’re looking to buy a property that already has a tenant, or if they’re looking to buy and hold real estate for equity. They may also want an agent if they want to flip a house, and they want to know which houses could potentially produce the largest amount of value.
What Does an Investment Real Estate Agent Do?
An investment real estate agent will work closely with a client to find an investment property that meets their needs.
Real estate agents who work with investors are concentrated more on the value of the real estate investment than finding a client “the perfect home.” While residential real estate agents might be focused on finding a client something they’re comfortable in, a real estate investment agent will be looking at things like equity appreciation and tenant markets.
An example would be a client who is interested in purchasing an investment property to rent out. An investor-friendly agent would discuss the current real estate market and potential rental income. Further, they would be able to help the investor calculate things like property taxes and capital gains tax to determine potential revenue.
An investor’s agent might also help the buyer find a property management company, or the real estate professional might even be able to find their investor client a tenant themselves.
Investors differ from traditional buyers not only in their needs but also in their funding sources. Someone interested in a commercial property or investment property, for instance, will usually need to put more money down.
An investment property requires a lot of consideration: operating expenses, capital appreciation, net operating income, and more. Because of this, those who are considering an investment opportunity (especially if they’re not an experienced investor) should also consult with their financial managers.
How Do Investment Properties Differ from Non-Investment Properties?
An investor is going to have different funding options from other buyers. Therefore, the Realtor will need to know more about what the investor can qualify for and what a pre-approval or pre-qualification means for them. An investor might be going into a deal on their own or with many other people. In that situation, the Realtor might have to work with an entire corporation or LLC.
Working With an Investor
When an investor purchases an investment property, their needs are usually different. They aren’t looking for a particular area or to be comfortable within their space. Instead, they’re looking for their broker to find the property that will yield the best ROI.
A real estate agent may need to dig down into the market to see where it would be best to spend money. There may be certain neighborhoods that are up-and-coming or ones on the decline. There may be new commercial properties about to be built that feature open spaces, or commercial lots ready for development in a high-value area.
Working With a Buyer
This is vastly different from working with a buyer who is looking to occupy a home. Comparatively, a buyer looking to occupy a home will usually know exactly what they want and where they want to live. They will be making decisions both financially and emotionally, which also means that the real estate agent will need to fulfill both desires.
The closing for a real estate investment might also differ. This is especially true when it comes to commercial properties. Commercial properties often have different contingencies, negotiating, and planning. If your real estate agent isn’t familiar with this process, it could be to your disadvantage.
Other investors may be looking toward trying to flip properties. Flipping properties usually requires a pretty lean budget and in-depth knowledge of the market, something that a good agent can also provide.
What Should You Look for When Hiring an Investment Real Estate Agent?
An investment real estate agent should be able to walk you through many market basics, such as the average property value of a real estate investment property in your area. They may not be able to go into your investment strategy or taxable income, but the right real estate agent should at minimum have an in-depth understanding of property values.
One of the major advantages of working with a real estate agent is that they network and have a lot of connections. The same goes for a real estate agent who specializes in property investment. The more a real estate agent knows about investment, the more likely they are to be able to find you a great deal or exactly what you need.
You can find an investment real estate agent by going to a broker who specializes in investments. You can also go to a property management company to ask for referrals.
Here are a few questions that you can ask a potential agent:
- What types of commercial real estate or investment real estate have you sold, bought, or managed?
- How long have you been working in the investment real estate space?
- What is your advice for someone who wants to invest in this area?
- What separates you from other potential agents?
Other than this, you should be looking for the same things you look for in any agent. They should have solid communication skills. They should respond quickly to your needs. And they should be able to find you what you want within a reasonable amount of time.
What If You Want to Work With a “Regular” Agent?
You might already know a great real estate agent. A real estate agent is still going to be able to help you, even if they have no specialization in the investment industry. But you will need to do more groundwork on your own.
As an investor, you may need to do more research regarding commercial property markets, tenant markets, and rental income. Your real estate agent might know the best places for someone to buy a home, but that might not be the right market for a rental unit.
Your real estate agent will still be able to close the deal for you, however. And your agent should be able to tell you when they are moving beyond the confines of their knowledge and need an expert.
How Do You Become an Investment Real Estate Agent?
Realtors can become investment agents simply by specializing in investment properties. There isn’t a special real estate license for a real estate investment agent. You just have to know a different body of knowledge.
A Realtor who wants to work with investments should start by procuring investment clients and learning more about the investment opportunities in their area. What is the rental market like? Are there a lot of tenants? Have rents been on the rise? Is the area primarily residential or commercial? Are property values going up?
A real estate agent may also want to look for a real estate broker who specializes in these types of transactions when it comes time to find their sponsoring broker.
Over time, a real estate agent will start to learn more about their local real estate business. They’ll be able to plan out property investments for capital gain and will be able to properly advise their clients on the potential cash flow of a property such as a rental property. At the same time, a real estate agent should not give personal investment advice.
Can a real estate agent help someone invest in real estate?
Real estate agents can help investors interested in investing directly in real property, but they aren’t experts in other real estate vehicles such as REIT funds. Real estate agents should not be considered investors and should not give personal financial advice.
Does an investment agent need any special training?
A real estate agent who specializes in real estate investing doesn’t necessarily need any additional certifications or a different license. What they need is additional knowledge of the commercial real estate industry or the current real estate rental market. An investment agent should be very well-versed in current tenant models (whether commercial or residential) and the appreciation values of the houses in certain areas.
Does an investor need to work with a real estate investment agent?
An investor doesn’t necessarily need to work with an agent who specializes in real estate investment. It’s just ideal. Any agent can help someone find an investment property. It doesn’t have to be one who specializes in working with an investor.
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