What are Creative Real Estate Investors and Why Work with Creative Real Estate Investors as a Real Estate Agent

Creative real estate investors are looking for creative financing deals. These deals involve buying properties using less common financing options like:

  • Owner Financing
  • Wrap Financing
  • Loan Assumption
  • Rent To Own, Lease To Own, Lease Option, and Lease Purchase
  • Agreement For Deed, Bond For Deed, Contract For Deed, Installment Land Contract
  • Subject To

Most creative real estate investors will be seeking these types of deals outside the MLS. While markets shift and change making some of these creative strategies appear inside the MLS from time-to-time, our current real estate market makes these types of transactions rare to non-existent inside the MLS. So, except for the same reasons I discussed with bird dogs and wholesalers, many real estate agents will opt not to focus on working with creative real estate investors.

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What are Buy and Hold Investors and Why Work with Buy and Hold Investors as a Real Estate Agent

Nomads are my favorite type of real estate investor to work with. Buy and hold real estate investors are my second favorite.

Buy and hold real estate investors, which we also call Flush Nomads, have enough down payment to buy single family homes, duplexes, triplexes, fourplexes, and commercial residential properties with 5 or more units. They are primarily looking to invest to get cash flow and long term wealth building with real estate.

Often they will be repeat buyers. Some will have recently discovered real estate and want to convert other investments like stocks into real estate holdings and so will want to buy a number of properties as quickly as possible. Other times, they will have saved enough for their first down payment on a rental property and buy one unit. But, they’ll be saving for their next property and when they save enough, if you take great care of them, they’ll be back to purchase another property with you then.

Often times, as the equity in their portfolio grows, they will want to tap into the equity in their properties to buy more properties by refinancing and using the proceeds from cash out refinances to buy additional properties.

These are great real estate investor clients to have. They tend to be smart, sophisticated, reasonable, professional, respectful folks that really appreciate someone who specializes in working with real estate investors. As they go out and acquire properties and brag to their friends how well their properties are performing, they become great advocates and referral sources for you. Birds of a feather flock together and so they replicate themselves by referring their friends who are often just like them.

They are often hungry for good information so teaching great classes is important to them and will attract them easily and consistently. Also, many of them believe in the concept of the slight edge and will return for classes they’ve already taken to pick up the one or two things they missed when they took it before, or to look for the latest improvements you’ve made. They’re often professionals in their careers and present well to other newer members of your group. I find many of my buy and hold real estate investors to be greeting and connecting with both new and returning members of the real estate investor group and talking up real estate investing in general and me, specifically, at our meetings. It is like having a small army of advocates wandering the crowd at your group meetings promoting you for free. I certainly appreciate when these folks do that for me and go out of my way to show my appreciation for them whenever I can.

My buy and hold investors and Nomads (which often become buy and hold investors) become great friends. I find us celebrating birthdays, holidays, and other social events together. I find us partnering on deals together. I find it very rewarding to be helping all my best friends improve their wealth with passive income generating cash flow and appreciating real estate.

Buy and hold investors are often looking for larger properties as well. While many start with single family homes, many of them graduate to duplexes, triplexes, and fourplexes. Eventually, many start to consider larger apartment buildings as well. This is a natural progression. You’ll find Pareto’s 80/20 principle at work here; a large percentage will want single family homes. A smaller number will be seeking out multi-family properties and a smaller percentage still will want larger apartment complexes. Helping your buy and hold investors purchase larger apartment complexes from time to time can have a significant positive impact on your earnings for the year. I’ve found you get those by taking amazing care of your clients buying single family homes as investments and teaching classes to your investor group to include some larger properties over time. Eventually, you’ll find yourself with a few serious, aggressive investors that want any and all the apartments you can find. My personal philosophy is that you don’t want too many apartment buyers lest you find yourself in awkward situations where a dozen of your clients all want the same apartment that just hit the market; that’s not a good place to be. You do want clients that cover a wide range of what comes up so you have one or two for everything.

With buy and hold investors you can truly have fewer clients and make more money since they buy a lot more frequently, often higher priced multi-family properties and refer more frequently than a typical owner occupant homeowner. Treat these clients and your Nomads as the extremely important friends they are.

What are Flippers and Why Work with Flippers as a Real Estate Agent

Flippers are real estate investors that are looking for opportunities to buy homes, fix them up, and resell them for a profit. While having a small number of flippers as clients will help round out your business, in my opinion, I don't think you should focus on working with these types of real estate investors.

There are two primary flavors of flippers: those that have their own money and those that don't have any of their own money. The flippers that have their own money may not have the full amount to purchase the properties but they have some resources to be able to do a much wider range of deals. The flippers that don't have any money need to find deals they can buy where they can borrow all the money, including repair money, from a hard money lender (or a private lender). The flippers that do not have any money are much more challenging to work with. Let me explain with an example.

Most flippers need to find properties they can buy at a steep discount. They need to find properties they can buy where there is enough room to be able to buy it, finance it, fix it up, market it, and make a profit. While numbers can vary widely market-to-market, a common number thrown around is that they often need to buy properties at least 30% below the value of the property after they fix it up and go to sell it. To be completely clear, that does not mean they need to buy the property 30% below the current list price. It does often mean they need to buy the property below asking price, so if you're in any way squeamish about making low ball offers, just politely opt out of working with flippers. You don't need to work with flippers to be successful working with investors as a whole; I much prefer Nomads, and buy and hold investors.

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