According to expert real estate investor Rachel Oliver, there are not enough real estate agents servicing investors—and it’s a shame, because they purchase a greater volume of properties than end users.
“Investors buy multiple properties over several years,” said Oliver, co-host Mothers of Real Estate TV show, co-author of MORE Confident Real Estate Investor Course, and Rent to Own Expert. “The average property investor coach gets two to five properties in a span of two years, which means that the real estate agent doesn’t have to show more properties. The [end user] purchaser is buying from a place of emotion, so they’ll have to see multiple properties. For a husband and wife, it’s difficult to pinpoint which property to move forward with, but we encourage investors to identify a market.”
Investors don’t cast wide nets; they target areas and zero in on them. Not only do investors’ targets provide sales agents with much-needed specificity, there’s a time-saving ‘rinse and repeat’ quality to their strategies.
“Being focused saves time,” said Oliver. “When an investor identifies what they’re looking for, and in which area, they can corner that market and build up the portfolio they have, so the agent is doing rise-and-repeat work rather than looking at different properties, tastes and budgets. It makes the work easier for the real estate agent.”
Investors constantly crunch numbers to ensure they’re cash flow positive, so they don’t need to be walked through properties like end users do. Moreover, savvy investors adhere to what Oliver calls the 1% Rule—which she says agents should familiarize themselves with.
“One percent of the purchase price is an indicator of how much the investor can collect from rent in order to cash flow,” she said. “If a property is listed for $400,000, the 1% Rule suggests that property needs to have a monthly income of $4,000 in order to cash flow. So after the investor factors in carrying costs, property maintenance, vacancy, etc., there is a positive cash flow they can bank on every month.”
That means condos don’t yield the same ROIs they used to, but that’s where Oliver says a sales agent can provide value to investors. Learn which areas yield the highest return on investments. Moreover, because investors often share notes, including names of sales agents, working hard for this subset of the buying market could yield the type of client who seeks out the agent rather than the other way around.
“Service other markets where investors are headed. Those are places where the price point is in the $400-500,000 range. That’s where the volume of real estate investors are going and that’s where agents should be thinking of going to.”
Sales agents should also learn about the kinds of market fundamentals that comprise essential components of investors’ strategies.
Talking about Ottawa, Oliver says, “The government is a pretty stable source of employment, so as an investor you have people with stable demand who are employable and have employment options. You have demand from people who are migrating and driving up the appreciation. They’re driving up the need for rental properties.”