For whatever reason, some people think they can simply buy homes and make money. If it were that easy then everyone would be doing it. More often than not these beginner investors need to be educated before they should even consider buying an investment property.
In these situations our jobs often extend beyond the simple buying/selling process and, in some cases, it may even be to inform them that investment properties aren’t right for them based on their personal situation. If you’re a transaction-based agent, then the latter statement may be hard for you to swallow. Right now I’m turning away about one in three beginner investors because they simply don’t have the means.
Educating your investors is not about positioning yourself as the expert in everything. Refer them to other professionals if need be, such as an accountant, lawyer and financial advisor. Depending on their goals, they may need an architect, general contractors, and information on city zoning and development permits – the list goes on.
As a general rule, I prefer to introduce these clients to others, as opposed to gathering information and passing it along. Reduce your liability by getting them directly involved so they can make independent decisions not based on your opinion or ability to pass along information.
Lastly, if you’re new to helping investor clients, be sure to educate yourself on the various markets in your service area. Learn the investment lingo, understand how to calculate the basic math (for example, cap rates, NOI, etc.), and be well versed on the different types of investment opportunities. If you simply feel uncomfortable helping these types of clients, then link up with someone in your office who has the experience and learn.
With interest rates still extremely low, and with the possibility of them going even lower on Wednesday, investors or want-to-be investors are coming out of the woodwork. Good for you if you’re working with an experienced investor. However, if you’re working with a beginner investor you may run into some challenges.