What to Know About Selling Income Property
At one time or another, all real estate agents express a desire to sell rental income property—at least that was my impression during my thirty-year real estate career. And some agents, of course, did, in fact, pursue that opportunity to service investment property alongside their residential real estate business very successfully.
How about you? Are you a real estate agent who has been thinking about servicing rental income property but are still on the fence? If so, then allow me to offer you a few tips that might encourage you to take the leap.
1. You Can Sell Rental Property
First, you must address the misconception amongst most residential brokers: That investment real estate is a specialty business confined only to commercial brokers and residential agents should never consider it.
Yes, there are some commercial properties best left to commercial real estate specialists. But this is not about high-rise office buildings. What's in view here are properties "mom and pops" typically invest in to supplement their income for eventual retirement (e.g., duplexes, four-plexes, and smaller apartment complexes). And in this case (other than the few nuances associated with real estate investing discussed later) selling residential income property is really much like any residential transaction that you've already encountered. So it's not a big step for you.
2. You Already Have Potential Buyers
Next, understand that if you're a realtor with even minimal experience, then it is highly probable that you're surrounded by potential real estate investors. Why? Because homeowners (like those you've been servicing) also become the same investors that are buying rental income property.
Okay, now think about it. You already have a relationship with these people. So you have instant access to potential real estate investors no further away than your customer contact list practically by default—not to mention your family, friends, and other acquaintances.
You get the idea. Chances are good that you already know someone who has been investing or will invest in real estate standing right in front of you. So why would you not want to take advantage of that?
3: Show Yourself Engaged
As one who sells for a living, you already know how important it is to make a good first impression. After all, how the customer perceives you within the first several minutes can make the difference between success or not. Fair enough.
But real estate investors are going to be less impressed with your Armani or Mercedes than they will be by the amount of interest you convey in real estate investing. In other words, investors want the confidence that you are (at least somewhat) engaged in rental income properties. So here are a couple ideas for you to consider before your initial meeting.
- Get acquainted with some of the popular returns and reports associated with real estate investing such as a cap rate and the APOD.
- Invest in a quality real estate investment software solution so you can run the numbers and present cash flow reports to your customer.
Remember, first impressions are the most lasting. Therefore the more engaged in investing you initially appear to an investor, the better your opportunity to gain his or her confidence that you're a notch above the average residential broker and the better chance you'll gain long-term loyalty.
4: Act like a Partner
Act like a "partner" to your investor. What does that mean? Convey by your actions and deeds that you are as committed as they are to protect their nest egg and really do care how their money gets spent. How?
- Be selective. Listen to what your investor's investment objective is and resist the temptation to simply forward information on every rental income property available for sale.
- Check the numbers beforehand. Present only those properties that you personally have evaluated and determined are compatible with the price, profitability, and returns set in your customer's investment goals.
- Be willing to lose a deal rather than having your investor get into a bad deal.
The idea is not to be a salesperson that's only in it for the commission. As a "partner" to your investor, your desire should always be your investor first.
5: Remain Proactive
Don't just settle for one deal, but actively pursue building and growing an investment real estate business.
Learn more about real estate investing cash flows, rates of return, and reports. Continue to keep a watchful eye on your local rental income market by monitoring current listings and sales. Keep beating the bushes to uncover new investors. And so on. In other words, stay on course.
You won't regret it.