Author: James Kobzeff Added: July 29, 2008
If you're a residential real estate agent without any experience selling investment real estate then this one's for you. I'm not a guru, selling e-courses, or asking for your birthright. But after thirty years in real estate, I figured it's time to give back a rudimentary observation I've made about selling income property. Yes, what I am about to suggest really does work (I speak from personal experience!) The best way to start is to agree on a premise. That residential real estate agents at every level of experience and skill are given at least one opportunity a year to sell rental income property, and yet, most fail miserably to capture that opportunity. Consider this. Residential agents do know numerous real estate investors. They sell houses to investors (investors are homeowners), they speak with investors at floor time or when making cold calls, and they have relatives, friends, and neighbors who are each a potential investor. In other words, agents that sell houses are exposed to, make contact with, and have an ongoing relationship with enough people who might purchase or sell rental income property to add one sale per year realistically. So why aren't most agents taking advantage of this opportunity? It's not because agents turn away business on purpose. Most agents know better than to turn down a four or five figure payday or shrug off an opportunity to pursue one. The reason that most agents don't act, are slow to act, react shamelessly, or refer the business away to a colleague, might surprise you. Real estate agents don't sell rental income property because they are under the allusion that they shouldn't mix the business of houses with rental units. Let me repeat that: "Golden opportunities to sell investment properties (and therefore to make much more money) are squandered away because residential real estate agents are under an allusion that they shouldn't sell investment real estate" Here's the issue. Residential agents generally ignore rental property altogether, having wrongly concluded that investment real estate requires expertise and specialty and should be left to commercial agents. But rental income property is certainly within the reach of residential agents. Any real estate agent with minimal effort can quickly incorporate real estate investing property into their business and turn it into a moneymaker. (Yes, that really has been my personal experience!) To accomplish that, however, for residential real estate agents to start enjoying the financial benefit associated with an income property business, they must confront, understand, and overcome the following five myths. Myth # 1 - Residential agents should not actively pursue rental property False: Residential real estate agents are in such an excellent position to work with rental income property they would be foolish not to. They already work with homeowners who are potential real estate investors and need only to cultivate those relationships. Start by asking the homeowner this question, "Have you considered investing in real estate?" Myth # 2 - Rental property is a business reserved for commercial agents False: Okay, it's true some commercial real estate requires expertise, and should remain in the hands of a commercial real estate expert. But residential income property (i.e., selling multifamily apartments) is not much more challenging then selling a house. The only requirement is that you learn how to run the numbers, but this is very easy with real estate investment software. Myth # 3 - Working with investment property requires years of experience False: You'll need to learn some real estate investing nuances and formulas, true, but there are numerous resources on the web where you can learn free. Plus, real estate investment software enables even novice agents to run the numbers and create quality presentations like the experts. Any real estate agent, with minimal tenure and budget, can easily gather enough knowledge and tools to become engaged in rental properties within days, not years. Myth # 4 - Investors care about Armani and Mercedes False: In most real estate markets, you can wear blue jeans and drive a truck to sell income-producing property. It's not the panache and style in most real estate markets, as a rule, what normally impresses real estate investors is an agent who understands investment property, is able to provide timely numbers that assist in sound buying decisions, and generally displays more concern how the investor spends his or her money than on the commission. Myth # 5 - You can ignore the preparation and wing it when you have to False: One of the most costly mistakes made by residential agents is not preparing for rental income property and then trying to wing it. The initial contact and encounter with any new buyer or seller is crucial. If you're not adequately prepared to discuss cap rate rates and APODs on the spot, chances are you'll lose the opportunity to another agent. Learn the nuances and invest in the tools before you need to use them. Preparing yourself to impress and captivate a customer is simply a truism of successful selling. Is It Worth It? Okay, here's where the rubber meets the road. As a residential real estate agent is it really worth your effort to engage in investment real estate also? Yes, absolutely, definitely, and unquestionably. Here are just two reasons. First, the commissions can be enormous. My very first rental property deal made me $24,000, which was, back in the 70's, equivalent to selling a ton of houses...and remember I was just a novice! Secondly, real estate investors can provide you with multiple deals over time. For unlike home buyers, investors often buy multiple properties, and probably will eventually exchange into a larger property. You don't have to quit selling residential property, just make some room for real estate investing property. You certainly won't regret it...take it from someone who knows. Here's to your success.
--- James Kobzeff developed ProAPOD Real Estate Investment Software to help real estate agents and investors quickly perform a rental property analysis. See this popular software at => http://www.proapod.com
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