Working with real estate investors will turbo-charge your business and will probably completely change your life. There is so much more financial opportunity and so much less competition when compared to working with the traditional real estate market. That’s one really, really good reason for working with real estate investors, but here’s seven more to get you all fired up and ready to own the world.
- One Client Can Make Your Career
Let’s start right there – the right client can make your career and your retirement.
That client can be a wealthy private investor, or an institutional investor backed by a Wall Street hedge fund, or an aggressive prop tech disruptor looking to grab market share with a new real estate model.
In the post-pandemic world, we’re seeing massive deal flow by institutional buyers and new disruptive real estate models.
2. There are Millions of Active Investors and Investment Properties
At any given time, the homeownership rate in the USA is around 65%. This means that about 65% of homeowners own their own home. By deduction, it also means that about 35% of homes are investment properties owned by an investor.
Conservatively, according to Zillow there are around 120 million homes in the USA.
35% of 120 million is 42 million homes.
Let that sink in for a moment!
There are as many as 42 million investment homes in inventory in the USA.
42,000,000!
3. There’s Less Competition
Now think about this from a sales point of view.
It also means that around 95% of realtors are chasing approximately 80 million homes owned and occupied as primary residences by ordinary homeowners.
But only 5% of investor-friendly realtors are chasing around 42 million homes.
This is the blue ocean where you get to fish without competition, and where you don’t need to discount price or overspend on lead generation.
4. Investors Are Serial Buyers
Investors like to buy houses, lots of them!
And they buy in all market cycles. For investors, it’s always a good time to buy or sell.
Conservative investors will slowly build up a portfolio by acquiring additional rental properties when they’re in the right financial position or when they find the right deal.
Aggressive investors are deal junkies that will wholesale, flip and hold as many deals as they can if the deal meets their investment box.
Institutional and prop tech investors are loaded for bear and, depending on their funding and business model, buy hundreds, thousands and even hundreds of thousands of homes each year.
5. Investors are Serial Sellers
Investors don’t only buy houses; they also like to sell houses. You have an opportunity to double-dip and be the agent on both the buy and sell side of the deal.
Investors also sell more frequently than the average homeowner. Most homeowners own a home for around seven years, but many investors, especially wholesalers and fix-and-flippers, will sell homes every year.
6. Every Homeowner is a Passive Investor
Technically, by default, every single homeowner is also a real estate investor.
The most important stat for you to know is that for 75% of retirees, their primary residence is the largest asset they own and will be responsible for a significant portion of their financial and retirement portfolio.
That’s a big deal.
When a home buyer buys a home today, you need to let them know that today’s decision is going to be the most important decision they made about their retirement plan.
Think of every homeowner as an investor. It will help you attract everyday homeowners as clients as you will have the experience and financial expertise that will be hugely beneficial to your clients and is not offered by other agents.
Your sales pitch to home buyers is that you can not only help them buy a home, but you can add an additional layer of investment expertise that other agents don’t possess.
This makes you a wealth advisor.
Get used to the term “wealth advisor” – it’s going to gain traction within the residential real estate industry.
You should also think of every homeowner as a future buy and hold investor.
The typical homeowner will start to build up equity in their primary residence after a few years of ownership and can be quite substantial after ten years. Equity will build as a result of appreciation in the property and through the paydown of their mortgage. The equity is generally locked within the property but can be unlocked relatively easily through a home equity line or second mortgage.
This gives the homeowner the ability to access the equity and use it as a down payment on a second home or a rental property.
You start your relationship as a wealth advisor on their primary home and expand your services to be an investment advisor on their future second home and rental properties.
Note that we use the terms wealth advisor and investment advisor is a descriptive way that is limited to your role covered by real estate licensing laws.
7. Invest In Your Own Deals
The same expertise and experience you use to work with clients can also be used to build your own real estate portfolio (and maybe even an empire).
If you do your job right, you will be surrounded by great investment deals. At some point you will be in a position to take down some of the deals on your own or get creative and convert your commission into equity in a deal. Your rental portfolio will become your college fund for your children and ultimately a major piece of your retirement plan.
Hello future mogul!