Real Estate 101 Ask the Teach: Buying Profile of the Average Real Estate Investor May Shock You

Remember Kelly Logsdon Rush? Teacher of the Year and my very first Real Estate teacher? Kelly is back with a somewhat regular little segment here on CandysDirt.com called “Ask The Teach”. I know a thing or two about real estate, but Kelly knows about five trillion things, so much, in fact, that she teaches RE at Champion School of Real Estate. So I asked if she would be our go-to, all-knowing Real Estate Oz. This week’s question comes from Brad Boswell at Supreme Lending. It’s aimed at the real estate professional, because Kelly teaches a whole class in investment real estate. In fact, she recently helped me remodel an investment property. She’s a great go-to source for questions on RE investments, tenant & landlord issues, managers, HOAs, commission splits, dual agency, consumer rights, you name it, you can Ask The Teach!

Question:  As a guest speaker in your Real Estate Finance Class, I’ve heard you mention many times that it’s a good idea for Realtors to work with Investors as part of their clientele.  What are the advantages of working with investors?                  

Great question Brad! But before answering, may I ask a question? How many Realtors do you know that would give up one-quarter of their income today without a whimper?   None…right? Well that is exactly how much business realtors are losing month after month, year in and year out if they ignore the investor client. According to the 2013 NAR Investment and Vacation Home Buyers Survey, 24 percent of all residential properties sold in the US were purchased by investors and 49 percent of those investors paid cash for the property… sweet! Today, the average buyer of a primary residence will live in the property 9 years before selling compared to 6 years in 2007.  Successful investors tend to buy and sell multiple properties over the course of a year and most often work with the same real estate professional on every one of those deals. The agent has the opportunity to earn commissions on both sides… the buy side and the sell side of the transaction or the buy side and the lease side. JUST DO THE MATH! The money is a great motivation, but there are other advantages of working with investors. One huge perk I personally appreciate is developing ongoing relationships with the investors. It’s also exciting and challenging collaborating on the property’s redesign, upgrades, choice of materials, color schemes and all the other necessary pieces of the of crazy puzzle we call the rehab process. It’s a great feeling of accomplishment to help the client achieve their rehab objectives and their profit goals for the project. So who are these Investors?  Well, you might be surprised. According to the Survey here are the characteristics of the investor client:

• Your investor’s median age is 45.
• Your investor’s median annual income is $85,700.
• Your investor’s property is approximately 21 miles from their primary resident.

Wait there’s more:

• 48% are two earner households.
• 47% are likely to buy another investment property in the next two years.
• 58% purchased detached single-family properties.
• 29% of the properties were 1,000-1,500 square feet.
• 47% purchased their property through a real estate agent.

Rule #1 if you want to work with investors: Understand the investor mindset!!! And understand that this is a significant chunk of the real estate consumer audience. What does that tell consumers? This is your buying competing!  PS: Brad, the student’s just love the class when you are a guest speaker.