There are numerous ways to make money from real estate. While you might be the most successful agent in your local market, you can increase your income and net value by investing in real estate yourself. After all, you are already an expert on buying and selling real estate, so why not use this experience for building your own investment portfolio?!
Here are the six most important benefits which you have as a real estate agent when you invest in properties.
1. Expert knowledge of the local housing market
The most significant advantage which you have as an agent over other investors is your detailed understanding of all the forces and trends in the real estate market where you work. Although real estate investing does not require previous knowledge and can be learned through online educational resources, no informal education and online research can ever beat the depth of knowledge and expertise which you have after years of buying and selling properties in your neighborhood.
Agents are familiar not only with recent and expected movements in home values, but also with trends in the rental market. They know which property type (single-family homes, townhouses, condos, or apartment) and what amenities (garages, patios, verandas, or swimming pools) are most sought after by renters in their specific location and bring the highest return.
All this means that agents can easily and quickly decide whether buying an investment rental property is a smart decision in their market and can profile the most profitable property right away. This gives them a major competitive advantage over other investors who need to spend weeks or even months to come up with similar conclusions.
2. Ability to conduct your own analysis
On average, it takes a regular person about 3 months to research a real estate market, search for properties, and find a good deal within his/her budget. As you can imagine, before an individual part-time investor is ready to move forward with buying a property, the good deals will have already been long snatched by professional investors. Agents can easily qualify as professional real estate investors as they spend their days buying and selling real estate.
Conducting real estate analysis is crucially important for the success of any property investment. You need to know the current status of the market, the fair price of the type of property you are interested in, and the kind of profitability you can expect from a rental property. As a real estate agent, you are already familiar with the state of the housing market as that’s how you make your commissions. Moreover, you can conduct comparative market analysis (CMA) on your own to decide what price makes sense for the investment property you’d like to buy. In addition, you have access to all the real estate data and tools to analyze the return on investment potential of available properties for sale in your location.
As a result, you can jump on a good deal as soon as it becomes available, without wasting time on analysis.
3. Access to all the best deals
As a real estate agent, you have access to the MLS database which ordinary investors don’t. That’s the precise reason why so many of them decide to hire an agent rather than invest on their own. Furthermore, you travel around your market every day and will see right away any “For Sale” signs on properties that are not listed on the MLS. Meanwhile, you are also familiar with the foreclosure activities in your neighborhood and know where to find the best foreclosed properties, bank-owned homes, and short sales in the local market. Through your network—to be discussed in detail in a bit—you also have access to off-market properties, one of the best sources of cheap real estate.
Because of the nature of their work, agents see the best deals in the real estate market first. As soon as they identify profitable investment properties for sale, they don’t have to offer them to their clients but can buy them themselves. That’s a priority access that other investors simply don’t enjoy.
4. Easier financing
One of the most challenging problems that first-time real estate investors run into is financing. Most of them don’t have enough cash to pay for an investment property in full, and they suffer from limited knowledge of other financing options such as conventional mortgages, FHA loans, private money lenders, hard money loans, and many others.
Once again, your expertise and your networking in the real estate industry come as an advantage in this regard. After helping your clients figure out their loan so many times, you are perfectly familiar with the mortgage requirements and interest rates in your area. Moreover, through your real estate network, you have easy access to different alternative lenders and financiers. The fact that you are a real estate expert will prompt them to trust you and choose you over other investors interested in their services.
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5. Real estate network
Real estate is a people’s business, and you—as an agent—know that better than anyone else. Knowing the right people is important not only when buying and selling properties for your clients, but also when you buy your own rental properties. You have spent years building your network of different professionals to advance your career as an agent, and now you can use this same network to invest in real estate.
For example, as mentioned above, finding financing through your real estate network is easier than it is for an ordinary investor. Moreover, knowing hundreds of homeowners, property buyers and sellers, and other investors will provide you with access to properties for sale—including off-market properties—as soon as they become available. Additionally, once you are ready to buy an investment property for yourself, you will already be familiar with the best real estate attorney to turn to for all legal matters associated with the deal.
6. No need to hire an agent
Even experienced real estate investors decide to work with an agent when buying and selling properties. This, however, does not apply to you. When you buy or sell an investment property, you don’t need to hire another agent as you already have all that’s needed to close a deal successfully. This means that you will save thousands of dollars from agent’s fees and commissions. This reality maximizes your return on investment right away.
As you can see, the benefits of investing in real estate as an agent are numerous. To make this your most profitable year in real estate yet, consider buying your own investment property.
About the Author: Daniela Andreevska is Marketing Director at Mashvisor, a real estate analytics tool that helps real estate investors and agents quickly find traditional and Airbnb investment properties. A research process that’s usually 3 months now can take 15 minutes. Moreover, we connect investors ready to buy with top performing agents in the local housing market.