As you begin the process of using your real estate license to build your thriving, profitable Investor business, you should be aware of some of your clients’ expectations and the possibilities for you to create multiple streams of income. Some of the information in the beginning of this article may be a refresher for more experienced agents. I would still review it though so the rest of the article will have more meaning for you,
Real Estate Agent Rules of Engagement
Before you can practice real estate you need to obtain a real estate practitioner’s license for the state in which you wish to represent others in real estate transactions. There are typically two classes you need to take, one is national and one is state. They are usually 30 hours each. You can now take these completely online, in a physical classroom with other students or a combination of the two. There are multiple providers for these classes. Many Real Estate firms offer these classes to prospective agents. They may even offer to pay for your classes if you sign up with them for one year. I do not normally recommend this latter approach. I recommend you take the classes and pay for them out of your own pocket. Then after you take and pass the licensing exams you can choose which company to practice real estate with. In order to practice real estate licensees do need to place their license with a real estate firm.
Once you have taken the classes you will then be required to take two exams, state and national. I highly encourage you to take several practice exams and even take a class that prepares you specifically for the exams. When I prepared for the broker’s exam I took thirty practice exams.
Once you have taken the classes, taken and passed the exams, and placed your license with a real estate brokerage firm, you now have the right to practice real estate. This does not mean you are prepared to practice real estate; rather you simply have earned the right to practice because you now supposedly have a fundamental understanding of real estate laws. That is all the classes you have taken so far are designed to do, that is, educate you on the very basic legal rules and regulations you need to be familiar with so the consumers you represent get fair representation from you.
Now you need to learn how to use your license in the business sense. This book is not intended to educate you on all of the skills necessary to be a successful real estate agent. This requires continuous education on your part for as long as you practice. The world of marketing and advertising is constantly changing. You will learn a lot of what you need to know from your broker, other agents in your office and your own blood, sweat and tears. I will go over, in simple terms what is expected of you in the roles of agency.
Real Estate agents could be involved in representing users and investors who are interested in disposing of their properties. This is a traditional activity in a commercial and investment brokerage, just as it is in a residential brokerage. When acting as a selling broker, an agent has an agency relationship with the seller and owes him or her fiduciary duty.
Another activity in which Real Estate agents might be involved is representing users and investors who are potential buyers of properties in selecting and acquiring these properties. When acting as a buyer’s broker, the agent has an agency relationship with the buyer and owes a fiduciary duty to him or her. This activity is more common in commercial and investment brokerage than in residential brokerage. For example, an agent could represent several fast food chains in their search for locations to purchase as sites for their restaurants. By becoming familiar with the specific requirements of a few users, the broker can provide a service to his or her clients.
Further activity in which investment real estate agents might be involved is the exclusive representation of landlords in their attempts to locate tenants who would be users of their vacant spaces, negotiating the leases for the use of those spaces.
As leasing agents, brokers would be involved in many more transactions than brokers involved in the investor or development part of the business. In fact, many commercial investment managers agree that the best way to transition from residential real estate to nonresidential real estate is through leasing commercial space. This activity allows agents to interact with many tenants and property owners, all of whom have specific needs that agents can try to fulfill. In addition, brokers can become familiar with a variety of properties present in their marketplaces.
- By showing potential users several properties, agents get to see a variety of spaces and have an opportunity to become familiar with the available inventory in the market.
- By showing several properties to potential users, agents get to talk to and meet many property owners who have spaces to rent.
- By showing multiple spaces, agents interact with other tenants who anticipate moving from their spaces and will need to find new spaces to occupy in the future.
Still another brokerage activity in which investment real estate agents could be involved is the exclusive representation of users looking to relocate and negotiating leases for space in landlords’ properties. By representing specific users, agents become aware of the users’ needs and the requirements properties must meet for the users’ businesses.
Of course you can use your license to help owner occupants buy and sell their own homes. Even though I was opposed to this at first I later warmed up to the idea and made a lot of money doing it. Let’s face it, all of the investors you service at one time or another will want to buy or sell their own home. You will also have come across many tenants who will one day buy their own home. You already have a database full of these folks. You might as well service them and further leverage the use of your real estate license and earn more commissions!
What’s more, these folks all have friends, relatives, neighbors, co-workers and fellow church members who want to buy and sell homes from time to time. I highly encourage you to remind your clients that you can service them too and encourage them to refer these people to you. When that happens you should reward them for their good behavior!
Speaking of referrals, the more you grow and prosper with your license the greater your reputation will spread. One way you can benefit from this is by sending referrals to agents in other areas. Surely, your clients have friends and relatives in other areas that either want to buy or sell their own home or may want to invest in real estate. A referral from you will carry a lot of weight and it will earn you a referral fee. Do not overlook this very valuable income stream. I have built an entire line of business around this very concept.
Build a Team
Ah, yes, building a business. First of all I remind you to treat this entire venture as a business and run it as such. One of the best ways to manifest this is to build a team around yourself and your business. When I first got really busy, I had developed systems, processes and procedures for me to follow every day so I could handle all of the business. When building my brokerage company, Win Realty Advisors, I actually built a team first. The first person I hired was an admin person. She was from another brokerage company and had an awesome reputation for being able to manage multiple tasks simultaneously and get a lot done – a lot more than 99% of other people.
My recommendation to you is, when you get really busy, hire a superstar admin. Be picky, don’t settle. Remember the old saying – hire slow and fire fast. Your definition of busy may be different than that of the next person. I was juggling more than twenty transactions, teaching classes, investing in property and managing property all at the same time. I was pretty busy. Whenever you find yourself heading down the road of unhappiness from relationships that need more of your time, or you need more of your time, and God needs more of your time then it is time to make your first hire. Nothing is more important than you fulfilling God’s purpose for your life and that will likely include being a good partner, husband; father, brother, son and friend for those in your life. You can get a copy of my book Husband, Father, Brother, Son from the website www.MyInvestmentServices.com.
After that you will figure out what to do next. It may include delegating the execution of your marketing plan, delegating buyer showings. You will know when the time comes.
One of the best things about building a team is that it will position you to build your own brokerage firm in the future if you choose to do so. You can read more about that in my book Build a Real Estate Brokerage Company for Profit and Build Wealth for Life. You can get a copy of this from the website www.MyInvestmentServices.com.
There’s more! All of your investor clients are accumulating a lot of rental properties and they need help managing them. I think it is a really good idea for you to offer to manage these properties for them! As a real estate licensee with your license in a brokerage firm you can this. Some firms are more accommodating than others. I have found Keller Williams is the best real estate company for entrepreneurial real estate agents who want to grow their own businesses. In fact I know personally several KW agents who manage several hundred units each as an agent with KW. You can learn more about this by reading my book Build a Property Management Business for Profit and Build Wealth for Life. Not only do you earn management fee income but all of these folks can bring in additional sales for you too!
As you can see there are a number of opportunities for you to build wealth and income by working with investors. You simply leverage what you are already doing. You can leverage your systems and operations, including bookkeeping and marketing, in many directions.
Even at the most basic level, you can’t buy every property and neither can your clients. When you identify more great investment properties than you or your client can handle, refer the deal to another agent or investor and earn commission anyway from your efforts. Remember, your real estate license is an income producing asset. Treat it like that and you will profit.
As you grow you will need systems, processes and procedures to allow for successful growth. These systems are not just for bookkeeping, marketing and advertising, and transaction flow but also for client support and representation.
Client Support and Representation
One of the first things you need to do when working with investors is to become familiar with the instructions I give to investors who work with me. You will find them in the Flip and Rental Rules of Engagement sections of this blog. Please remember that there are major differences between working with owner occupants and working with investors.
When working with owner occupants you generally do most if not all of the work. You do a lot more hand holding. They don’t usually know a lot and so you have to explain everything to them. They also tend to be more emotional in their selling and buying behavior. They also only need you once every several years.
Investors, on the other hand, get easier and easier to work with over time. They continue to learn. They are hands on. In fact, if you follow my instruction sheets, you will see that I delegate a lot of the work to them. You give them the data and let them do the financial analysis. They do drive by’s. They do the physical analysis. Anytime an investor approaches me and wants me to do all the work for them I take it upon myself to educate them first. If they don’t want to do things my way then I send them down the highway to some poor sucker of an agent who doesn’t know any better and has time to waste. Not me and not you. I also command a minimum commission. This protects me when working with investors who want to buy cheap foreclosures.
With investors I get to dictate that they work on my schedule. They may not know it but that is what is happening. I always schedule my showing days and times a week in advance. I send an email to my active clients on Wednesday and give them the day and time blocks I have available the following week. Then it’s first come first serve. They must give me the MLS numbers of the properties they want to see at least two days in advance of our scheduled date and time to meet and view properties. Oh, I occasionally get the knucklehead who can’t follow simple instructions. You know the ones who never could get to school on time and when they did they turned in their homework with food stains on it and that’s if they even had their homework. I give them a chance or two to correct their behavior, and I help them do that, but if it appears habitual I draw the line and they get the message.
I love working with investors because it’s repeat business. It’s the gift that keeps on giving. Many of my students have gone on to buy large apartment buildings earning me large commissions and large property management contracts. I am able to leverage all of my activities working with investors into additional lines of business providing additional income streams and wealth building opportunities. Perhaps one of the best benefits of working with investors is how many friendships I have developed where I actually get to spend time with them doing something we both love to do – build wealth and income with Real Estate!
Being the Right Kind of Realtor
If you are not a licensed real estate agent then read this. If you are a licensed real estate agent then you need to read this too so you will know what all of my students expect from you!
The following is an excerpt from my other books on what I teach investors to look for when selecting a real estate agent. This should be an eye opener for you. Also, I do not intend to insult you. I am one of you! I am merely enlightening you to what is expected of you as an investor agent. OK Ready? Here we go:
“The Investor Realtor! In the world of Real Estate Investing there is no other kind. If you are using your neighbor’s son then you are a loser and you will pay a dreadful price. Every real estate agent on the planet will tell you that he or she is the right agent for you and they are the best at helping you. Make sure you ask them how much real estate they own. How many other investors are they working with? If they have so many other investors then how do they have the time to help you? Keep asking questions. Eventually, they will run out of crap to tell you.
I originally got my real estate license because I was sick and tired of realtors who didn’t know what they were doing in the world of real estate. The rules of engagement for real estate investing are 180 degrees different form the rules of engagement of the owner occupied real estate business.
My neighbor was my 1st realtor. I had to fire her and it pissed off the whole neighborhood. She wouldn’t or couldn’t learn what she needed me to teach her. So I fired her and got my license. I eventually developed a system to teach other realtors how to work with investors. Trust me. It makes a huge difference. Having a traditional real estate agent try to help you with your real estate investing is like having a motorcycle mechanic work on your airplane.
If you invest in real estate the way I am teaching you to, then you will one day own an airplane. Now imagine yourself getting ready to take your plane down to Florida to play golf and you just found out your regular mechanic was off sick and the airport had a motorcycle mechanic, who happens to be the air traffic controller’s nephew’s neighbor, who just happened to be a recent graduate of the Acme school of motorcycle mechanics because he got laid off from his last job. How does that make you feel? Well, remember a lot of real estate agents are real estate agents because they got laid off from their last job and getting their real estate license took only 60 hours and cost only a few hundred bucks. Does it sound like they are highly qualified to help you invest your precious hard earned money? I didn’t think so. Don’t be stupid. If you use one of these Imbeciles you will end up losing your money and wishing you were going down in that plane that the bozo motorcycle mechanic worked on. By the way, I have no problem with motorcycle mechanics in general, only the ones who are foolish enough to work on an airplane.
There are a few things you can do to enhance your relationship with your real estate agent. One of them is to sign a Buyers Agency Agreement. I have taken and have seen material from other real estate gurus who say you should have as many real estate agents working for you as possible. Trust me, they don’t understand agency from a legal point of view, an ethical point of view or a business point of view. In this business you need real players on your team. A good real estate agent who really understands the rules of engagement when it comes to real estate investing is worth their weight in gold. You wouldn’t have multiple tax accountants prepare your taxes. You wouldn’t have multiple lenders making you the same loan. You wouldn’t have multiple closing companies working on the same file. So why would you have multiple real estate agents sending you properties from the same pool of properties? They all are pulling properties from the same database and they all have the same tools and access. Using multiple agents is only going to piss them off. They won’t stick around and they certainly won’t give you their best when they don’t have an exclusive agreement with you. Get real. If you were working for commission and a client was using multiple real estate agents how much energy would you put into that effort with little to no assurance of getting paid?
More importantly, you don’t want traditional real estate agents working for you anyway. You want an investor/agent who is themselves an investor and/or has a proven track record of helping other investors profitably grow their portfolios using the rules of engagement I teach when I show investors how to invest and real estate agents how to correctly work with investors.
The other important factor in using a buyer’s agency agreement is that the agreement affords you certain rights and requires the real estate agent to assume certain responsibilities that would otherwise not be in place and in the end be to your disadvantage.
Another important piece of information is having Proof of Funds. This tells your real estate agent you are qualified and it also gives your real estate agent leverage and power when working with other real estate agents. Proof of Funds can either be a bank statement showing you have the available cash to make a purchase or a lender pre-qualification, lender pre-approval for a loan or Line of Credit statement showing that you have funds ready for you to borrow.
Think Military. Think Sports. Think Family. Think Friends. Think profitable business. A good Real Agent is a critical member of your team. I strongly encourage you to treat them that way.
Well that ought to give you a little insight into the current state of affairs and what is expected of you and what you can expect from investors!
For more information please visit MyInvestmentServices.com, call 1-800-931-2605 or email Gary@WinRealtyAdvisors.com
Written by Gary Wilson, June 16, 2014
How I Did 110 Transactions A Year With NO Assistants…And You Can Too… Get My Case Study Now>> https://www.myinvestmentservices.com/gift
“Guiding You to Massive New Wealth in Real Estate in 1 Year or Less Guaranteed!”