Real estate isn’t exactly known for repeat business. The average person is expected to buy only three homes in their lifetime, spaced years apart. As an agent, you might only work with a particular client once, maybe twice. They simply won’t need your services again. And when they do buy and sell again, odds are that they will go with someone else, either because they’re moving out of state or they simply lost your contact information.
To be a truly successful real estate agent, you need repeat business. That’s where property investors come in. These buyers purchase again and again, and if you help them grow their portfolio you can become an important part of their operation, a valued resource they turn to whenever they want to buy a new investment property.
So how do you find these investment property buyers? And how do you become their go-to resource? In this guide you’ll learn how to find investment buyers and become their ultimate investment property resource. Just read on.
How to Track Down Investment Property Buyers
There are two types of property investors: experienced investors with a large and growing portfolio, and those who have never bought investment property but would be interested should the right opportunity present itself. Most people try automatically to pursue the former, when the latter could be right within reach.
Reach out the previous clients. This may seem like a no-brainer, but it’s surprising how many agents don’t do this. Many only want to reach out with something meaningful beyond the general “checking in” or “happy holidays” email, which is understandable. But simply asking previous clients if they have ever considered buying investment property is a true value-add. Just a well-written email telling them that now is a great time to invest in real estate, and asking them to discuss if property investment is right for them, is a great way to start the ball rolling on a meaningful conversation. Even if they’re not ready they might know someone who is.
Help your buyers choose a budget. Here’s where the rubber meets the road, and makes the difference between an agent who simply shows a few houses and then shows up at closing to collect a check, and a trusted advisor. Guide your home investor clients through the process by helping them determine a budget. Ask them questions such as:
What investment size (cash) are you looking to make?
How much equity do you have in your current home?
Are you more interested in income or value growth?
Are there other real estate holdings in your portfolio already?
Be a vendor resource. Many of your clients want to own investment property but don’t want to do the work of being a landlord. Putting them in touch with property management companies and other individuals who can handle things like tenant application screening, collecting rent, and doing maintenance will put you in good stead with them and keep you top of mind. Plus, your contacts among these individuals and companies could be a steady source of potential investment clients.
Analyze properties to ensure a good fit. One of the biggest concerns of investment buyers is whether or not the property in question will be a good investment, namely will it be cash-flow positive and will it increase in value.
The problem is this can be quite time-consuming, and real estate search engines like Zillow aren’t exactly set up to search for investment-related metrics. That’s where EZ Assets comes in.
What is EZ Assets?
EZ Assets is a search engine designed specifically for investment properties. It allows you to search through thousands of properties in seconds to find the best properties based on investment specific metrics. Real estate databases like the MLS and Zillow are designed for regular homebuyers looking for their forever home, not investors looking to turn a profit. While these services are very good at their job, they’re not set up to provide investment-related property data.
How Does it Work?
When your client logs in to EZ Assets using a special link you have provided them, they’ll be able to search for quality investment properties using investment-specific search criteria, such as monthly rent, cash on cash return, cap rate, and more. The image below shows our advanced search filters.
Investment Metrics – What You Need to Know
Real estate investing is a different animal from typical homebuying. It requires gathering data about a property that doesn’t come up in an MLS search. By knowing some of these terms you’ll be able to help your investment clients find the information they need to make better buying decisions. EZ Assets uses many of the following investment metrics to evaluate rental properties:
Cash On Cash Return – One of the most important rate of return calculations in real estate, this is how much money you will make from the money you’ve invested in your rental property in a year. For example, if your initial investment is $50K and the Cash on Cash is 10%, you’ll receive $5,000 in your first year, or $417 per month after all expenses have been paid.
Cap Rate – The capitalization rate is used to determine a property’s worth, considering vacancy, credit losses, other income, and operating expenses. It compares the yearly net operating income to the property’s purchase price or market value. The cap rate excludes the loan payments from the calculations so we can use it to evaluate the property independently of financing terms.
Certified Deals – In addition to our AI algorithms, our investment analytics team manually verifies the best of the best investment deals. These deals are usually time-sensitive because everyone wants these properties, so investors must jump on them fast.
Closing Cost – the sum of all costs you’ll pay when buying a property in addition to the down payment.
Down Payment – Required by a mortgage lender when taking out a loan to purchase a property. Adjust the down payment in the property details page to estimate the property returns.
Initial Investment – The total of all costs to purchase your property. This includes the down payment, the closing costs and optional rehab costs.
Interest Rate – This expense is included in your monthly loan payment, calculated as a percentage of the mortgage loan. The mortgage interest compounds. You can usually deduct your interest on your tax return.
Internal Rate of Return (IRR) – The average annualized rate of return on all the cash you’ve invested in the property, also known as annualized ROI (Return on Investment). ROI tells an investor about the total growth, from start to finish, of the investment. IRR tells the investor what the annual growth rate is.
Management Expense – The money the investor will pay to their property manager as a percentage of the monthly rent.
Monthly Cash Flow – The money you’ll make each month after expenses.
Monthly Expenses – The money spent on the property every month, including the mortgage payment, property management, vacancy and maintenance, taxes, HOA, and insurance.
Monthly Rent – The amount your tenants will pay to you every month.
Monthly Taxes – The property taxes you pay every month to a state, county, and sometimes city.
Neighborhood Rating – We derive the neighborhood quality from the assigned school ratings.
Rehab Costs – The money you expect to spend on repairs before your property is rented out.
Rent Ratio – A rate of return comparing the monthly gross rent to the purchase price, including the potential rehab cost. A 1% or greater rent ratio is a good rule of thumb for a single-family home. Multi-family and condos are a bit different.
Vacancy and Maintenance –The amount of your monthly rent you should save for repairs and to pay expenses between tenants.
5y Value Increase –The potential increase in property value over 5 years.
EZ Assets allows your investment clients to plug in values for most of these metrics to find the right investment property that will give them the monthly income and rate of return they desire.
Our AI-powered search engine takes all the grunt work out of investment property research so you can get back to showing houses and closing more deals, all while becoming a valued resource for your property investment clients. You’ll love having this powerful tool in your real estate arsenal, and your clients will love having thousands of investment properties all over the United States right at their fingertips. They’re just one search away from the investment of their dreams. And you’ll be their hero for leading them to this valuable resource. To get started with EZ Assets visit here.