Investors in Real Estate: An Opportunity for the Local Agent

The rental market has grown rapidly since the pandemic and rental prices are nearly 30% higher than they were before the pandemic. With the interest rates expected to start dipping a little in 2024, the cash-on-cash returns will be a little bit more attractive very soon. Homeowners are looking to unlock the equity they accumulated in their homes during the recent boom years to finance a rental property.

In fact, the largest segment of real estate investors are the landlords who buy and hold properties for supplemental rental income. We call this segment the Income Investors. Even though it is a large segment most of the real estate investment forums, training classes, and advertising, caters to the professional investors who are employing strategies such as fix-n-flip, buy-build-sell, etc. There is little to no services available to the income investors and they resort to gathering information and conducting their research on online IDX portals such as Zillow and Realtor.com.

30 %

Increase in Rental Prices since 2019

In addition, investors are typically repeat customers for agents because every investor would want to expand their footprint in a market to get the benefits of economies of scale or to sell and buy a different property. Franchises such as HomeVestors of America have been successful at attracting repeat professional investors but agents and brokers in every market are very well suited to help the smaller investors.

75 %

Of Rented Properties are owned by Income Investors

A good starting point is for agents to begin publishing local market analysis for rentals and the opportunity for income generation. To achieve that at scale to increase their reach in their markets real estate professionals need to leverage automation technologies that can increase their productivity. Most IDX and Website providers do not provide any rental related tools in their platform and instead the agent is left to use data and analytics from the MLS to prepare their own marketing collateral from scratch. And imagine doing that every month to educate and nurture their target clients.

One more aspect to note is that most investors are also self-motivated and they don’t like to take an agent’s advice at face value. For this reason in addition to providing market updates and analytics to such clients agents should also offer self-service tools to help the investors play with numerous what-if investment scenarios before making a decision on a transaction. Such an engagement will place the agent at a unique advantage as not just a service provider but as a partner in the investor’s growth. Such a value recognition drives deep, long-term, and trustful relationships.

While this article focused primarily on the opportunity for agents and brokers in the growing income investor segment, we will delve deeper into the mechanics of how to help such investors in the next article. Please follow us on LinkedIn to stay tuned.