Fix & Flip for the Real Estate Professional
June 20, 2016 |
Executive Director, Arizona Real Estate Investors Association
Nobody knows an exact count, but there is a rather large number of Realtors® who also invest in real estate. If you aren’t one of them, this is the perfect month to explore the possibilities. Also, if a Realtor® represents investors or plan to in the future, understanding what investors know and what they need is a critical area for success in this area of real estate. Let’s explore both as it relates to current market conditions.
Current Residential Investment Market Conditions
Arizona Real Estate Investors Association (AZREIA) flies a flag to indicate current market conditions similar to warning flags you see at the seashore. Our flag has been primarily green for a long time indicating favorable conditions in all real estate investing strategies including cash, cash flow, income and wealth building. Income property is performing very well with rents rising 7 percent over 2015. AZREIA projections continue to see high demand, low vacancy and rising rents over the next couple of quarters – as well as a long-term positive outlook. Rehabbing (fix & flip) has improved over the past year and we have also seen increased profits. Acquisitions (including wholesaling) is challenging with tighter supply.
Realtor® As An Investor
There are two critical skills every investor must learn and perfect over time and never fully delegate. Most Realtors® already possess 100 percent of one of these critical skills and have a workable knowledge of the other. The first one is to accurately “comp” a property and the other is experience with gauging the costs of repairs or to upgrade a property. These skills are key factors for fix & flipping or acquiring a rental – most new investors have no idea how to do either.
Additionally, Realtors® have developed project management and communication skills which is crucial to be an investor. Just think of all the transactions Realtors® painstakingly push through the closing process. Other important aspects Realtors® have is an understanding of the territory, Arizona Multiple Listing Service (ARMLS) research and sales skills – not to forget a team of contacts which is typically already in place that will assist in many aspects of real estate investing. Having a real estate license also provides immediate credibility with the buyer or seller. Realtors® can bring an exceptional amount of knowledge and skill to the investment realm making investment success much more likely.
Representing Investor Clients Or Traditional Clients Who May Buy Or Sell With An Investor
Realtors® who are also investors bring a high level of practical knowledge to clients. For those who are not investors, an understanding of creative approaches to an investment acquisition or disposition of real estate may determine the failure or success of the transaction. Creative investment strategies many times provide win-win solutions when a traditional approach hasn’t worked. After all, the root word of creative is the verb “create.” An investor must know how to create a deal that solves the problem, is legal, ethical and moral to serve their customer. The Realtor® who fully understands and can communicate the benefits of the creative solution, along with the possible exposures, will also best serve these types of clients.
Realtors® who plan to represent investors should become very comfortable with mastering the art of creative solutions. Taken one step further, keeping up-to-date with investment market conditions and new strategies to effectively serve the client is imperative.
Alan Langston is the Executive Director for Arizona Real Estate Investors Association (AZREIA) which serves its 2000+ members through chapters in Phoenix, Tucson and Prescott. Alan can be reached at 480-990-7092 or www.AZREIA.org.
Source: Cromford Report, ARMLS®
Find It, Fix It, Flip It Seminar
FRIDAY, JULy 29, 2016 – 9:00 AM TO 12:30 PM
Join Jace Johnson, featured on “Property Wars”, Brian North, North & Co., Isaac Kahn, Palmyra Development Co. and many other “flipping” experts. Each speaker will share best practices and proven strategies for success.
Credit: 3 hrs. Legal Issues