Top 5 Reasons why Realtors and Brokers should work with Investors

Working with a real estate investor around Indianapolis

There are many different opportunities within real estate to expand your business and take your career to the next level. One great option is to work with Real Estate Investors. While investors are not a typical client for realtors and brokers, they could be a valuable asset to your business endeavors.

We’ve rounded up the top 5 reasons why you should work with Investors along with or instead of traditional home buying clients.

1) Ease of working together

Traditional homebuyers bring a lot of emotion and indecision to the house search. Which makes sense since they plan to find a (semi)permanent home for themselves and their families. A difficult client, however, can delay the sale of a home and drag out a home search, making the job particularly difficult for their realtors. Some deals can take months, with picky buyers and sentimental sellers, but with investors there is usually little to no emotion involved. Investors are not looking for their ‘forever home’ or ‘dream home’ they are looking for a property that has a good return on their investment, or ROI. With this much more narrow focus, it is a lot easier to find properties in specific areas or with specific pricing criteria that will need some rehab done or will be turned into a rental with little additional work done.

While traditional home buyers might see as many as 30 properties, investors typically will calculate the value of the home much quicker and in some cases won’t even want to see the property if the inspection and return on investment checks out. This could save you, as a realtor/broker, valuable time and energy. It also could produce future deals, if the working relationship between yourself and the investor goes smoothly. This leads us to our next benefit of working with an investor: they are more active than a traditional homebuyer.

2) More Active Clients

According to this data from the National Association of Realtors Research Department, homebuyers on average live in the same property for around 15 years, while around 18% of traditional homebuyers never plan to move from their home. This is a stark difference from investors who typically are looking to buy investment properties every 2/3 years. With a traditional homebuyer, you might be lucky to service them one more time in their lives, if the relationship/process went well and they choose to work with you again. Contrast this with investors who could potentially be retained as clients and provide you with business every few years, or if you’re lucky and work with an experienced and successful investor, you could do deals multiple times a year.

This makes a huge difference, when it comes to commission. If you have a good relationship with the investor, you could earn multiple commissions from the same lead every couple of months. Further, if you build relationships with multiple investors, this number could increase exponentially. This brings us nicely into our next point: investors could increase your client pool substantially.

3) Increased Client Pool

While traditional, active homebuyers only make up a small percentage of the population each year, investors could really maximize your client pool. Not only do you have the opportunity to work with local investors, but in ‘hot markets’, you can also attract out of state investors into your local areas. On the opposite side of ‘hot markets’ are traditional homebuyers who might be priced out of the market, making it extremely difficult to find clients and/or find properties they could even afford to get the deal done. Higher prices might drive folks who would consider buying a home, to instead rent. This increase in rental demand, for both short-term and long-term rentals, could also be a huge benefit for investors, increasing your potential client pool and your ability to close deals. With in-state and out-of-state investors, you could quadruple your client pool and even better, close deals quickly!

4) Close Deals Quickly

This leads us to our next huge benefit of working with investors; they are typically much quicker in their search and subsequent buying of properties. While traditional homebuyers might need to see dozens of properties, investors are typically very focused on a specific zip code/area or price range and can move quickly. Traditional homebuyers also might have trouble securing a mortgage, might have financing fall through at the last minute, or could drag out a deal with negotiations around inspections and appraisals. Investors tend to be lower-risk borrowers if they already have properties in their portfolio that can be collateralized. They also have access to more creative financing options like: private lenders, hard money lenders, crowdfunding, or partnerships. When a lot of these deals come down to money, you are better served working with investors who have multiple streams of potential income and tend to have more cash on-hand.

5) Higher Commissions

Speaking of money, our last benefit of working with an investor is the ability to make larger commissions. Traditional homebuyers usually have a very specific budget and do not have much flexibility to increase it. On the other hand, investors are able to access multiple financing options that typically are more flexible with increasing or decreasing the funding depending on the deal. Investors also normally have more of their own cash on-hand, which gives them a lot more flexibility in this arena. For these reasons, investors are typically searching in a much wider price range. They could potentially afford properties worth millions, think commercial or multi-unit rental properties, or if they stick with lower priced single-family homes, they might be in the market for 2 or 3 of these types of homes in a year. Whether it’s higher priced properties or multiple properties in a short amount of time, you are looking at higher commissions when working with investors compared to traditional homebuyers.

The Added Value of Working with Investors…

Overall, there are many benefits of working with investors as realtors/brokers. When you work with investors, you are maximizing your potential to expand your business and do more deals! We know just how valuable you are to our communities: you find us the houses we live in and contribute to the overall development of our communities. When you exclude investors from your client pool, you are leaving money on the table. So, consider these 5 benefits and see how they can add real value to your work and take your business to the next level!

At CPL Investments, we have countless clients who are investors and brokers. We see a unique and promising opportunity in this intersection and want to support our clients and our communities to find the benefits of bridging these endeavors. Consider reaching out to us today if you are a realtor/broker interested in connecting with investors or if you yourself are interested in trying your hand at real estate investment. With a great partner like CPL, the potential is limitless!