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 worth 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 to build your own investment portfolio?!
Here are six reasons why real estate agents should invest in real estate.
Benefits of Investing in Real Estate as an Agent
If you’ve worked in the real estate industry for a while, you may have experienced slow seasons or down markets. Savvy agents look for other forms of income to help during these less-than-lucrative times. Real estate investing is a great way to bring in more income.
Here are some reasons real estate agents should invest in real estate.
1. Real estate agents have deep knowledge of the local housing market.
The most significant advantage you have as an agent over other investors is your detailed understanding of all the forces and trends in the real estate market. Although real estate investing can be learned, no education or informal online research can beat the depth of knowledge and expertise you have after years of buying and selling properties in your neighborhood.
Agents are familiar with recent and expected movements in home values and trends in the rental market. They know which property type (single-family homes, townhouses, condos, or apartments) and what amenities (garages, patios, verandas, or swimming pools) are most sought 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 recognize the most profitable property immediately. This gives them a significant competitive advantage over other investors who need to spend weeks or months coming up with similar conclusions.
2. Real estate agents can conduct their own analysis.
On average, it takes a regular person about three months to research a real estate market, search for properties, and find a good deal within their budget. As you can imagine, before an individual part-time investor is ready to buy a property, the good deals will have already been snatched up by professional investors.
Conducting real estate analysis is crucial 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 a comparative market analysis (CMA) 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.
3. Real estate agents have access to the best deals.
As a real estate agent, you can access the MLS database, unlike ordinary investors. Access to the MLS is one reason many investors hire an agent rather than find properties on their own. Furthermore, you travel around your market every day and will immediately see any “For Sale” signs on properties that are not listed on the MLS. In addition, you are also familiar with the activities in your neighborhood and know where to find 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; they can buy them themselves. That’s a priority access that other investors simply don’t enjoy.
4. Real estate agents are knowledgeable about financing options.
One of the most challenging problems first-time real estate investors encounter is financing. Most 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 networking in the real estate industry are an advantage in this regard. You are perfectly familiar with your area’s mortgage requirements and interest rates. Moreover, your real estate network gives you easy access to alternative lenders and financiers. Being a real estate expert will prompt them to trust you and choose you over other investors interested in their services.
5. Real estate agents have a vast network of industry insiders.
Real estate is a people’s business, and you—as an agent—know that better than anyone else. Knowing the right people is essential 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 for you than an ordinary investor. Moreover, knowing hundreds of homeowners, property buyers and sellers, and other investors will provide you 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. Real estate agent investors can work for free.
Experienced real estate investors often work with an agent when buying and selling properties. However, when you buy or sell an investment property, you don’t need to hire another agent as you already have everything required to close a deal successfully. You will save thousands on agent’s fees and commissions. This maximizes your return on investment right away.
As you can see, there are numerous benefits to investing in real estate as an agent. To make this your most profitable year in real estate, consider buying your own investment property.
Learn more about real estate investing while keeping your license current. Colibri Real Estate offers helpful real estate continuing education courses focused on investing. And if you decide to upgrade your real estate license to become a broker, Colibri may be able to help with that process as well.
