Carving Out an Investor Niche Through Differentiation

Active Real Estate Investors Can Fill Your Income Gaps

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Active real estate investors can be a great target niche for the real estate professional. This is particularly true for real estate professionals who prefer a more business-like approach to locating properties and handling the transactions.

What Active Investors Want From a Real Estate Professional

Investors need no hand-holding. They want a real estate professional who:

  • Understands their investment objectives and expends the effort to locate properties that fit.
  • Will present all offers, even very low offers, to the sellers or their agents without complaint.
  • Understand that the ratio of deals to offers will be low, but that the contract offers will still require less time and effort than showing dozens of properties to a home buyer or couple.

Working with hardcore flippers or wholesalers presents a minimal opportunity, as real estate professionals will rarely find appropriate properties listed on the MLS (Multiple Listing Service). However, there has been an increasing demand for investment real estate among disenchanted stock and bond market investors in recent years.

A Great Group of Real Estate Investor Prospects

Who would be your target for an active investor who could possibly bring you two to three commissions each year? Characteristics this person could possess include:

  • They have weathered enough stock market storms to be looking for something else a bit safer.
  • Monthly cash flow is more important to them than short term value appreciation.
  • They want to own rental property, but they do not have the time or they do not want to search out deals.
  • They would pay retail pricing if the numbers are there showing decent cash flow.

    Your fit in this market would be to match up these investors with properties that would provide cash flow at the price they will have to pay to get them. To do this you need to hone your research to accomplish two tasks:

    1. Know the current rental market in the areas in which you practice; rents and competition.
    2. Keep close tabs on the MLS for the homes that can be purchased and rent for good cash flow.

    Set alerts in your MLS for price reductions so you can see when previously overpriced properties for this strategy are getting closer to being in your investors' price range for rental. Pull together rental information by home type and neighborhood. If your MLS also handles rentals, all the better, though many do not.

    So far, these activities aren't going to take you more than three or four hours each month. If it takes longer, it's likely that you're getting notice of more opportunities and you're analyzing them from the viewpoint of an investor. If so, you have some valuable information to share.

    What you need to do is to seek out homes listed at prices that with some negotiating could result in a purchase price that will cash flow as a rental in the current market. What you want to be able to show an investor are hard numbers that show a positive cash flow and total income and tax breaks that will provide a double-digit return.

    They're not getting that from savings accounts and CDs.

    Serving Up Information to Investors

    If you see opportunities, you need to figure out how to get to the investors. Some of them may just now be thinking of investing in real estate, and you have to find them. First, get involved in a local real estate investment club. In just about every real estate investment book, readers are advised to join one of these clubs to learn more and meet other investors and real estate agents.

    Meet them there, advertise for them on your website and with a blog. Offer a newsletter or email alerts of homes you've located and analyzed that are potentially good investments. When you begin to see investor buyers seeking you out, you're on the right track. Also, they're not going to need handholding. They don't need to love the home, just to love the numbers.

    If you like the research and due diligence involved in real estate investment, bone up on it and consider giving a free seminar to local people who would like to consider diversification into real estate. Develop a simple PDF document or eBook and provide it with a class on how rental property investment yields great results. Work up some real examples currently listed. You never know, you may get a deal out of the class!