How to Sell Rental Income Property to Real Estate Investors

Although I have been privileged enough to make a good living selling real estate to a wide-range of investors over the past thirty years, I will admit that I am not as successful as some but most certainly not as benign as many. In other words, I don’t regard myself as an expert when it comes to working with real estate investors, nonetheless I am one who chose to sell income property rather than residential property and had the good fortune to do it pretty well.

What I want to pass along to you are some insights about what I learned real estate investors look for in a real estate agent before they open their check books and maybe even return your telephone call. Hopefully it will help you.

Trustworthiness

Whether the investor was a high-rise office chest-beater who always made sure I understood who was ultimately responsible for my commission or a mom and pop down the street who understood that they also put their pants on one leg at a time, the common denominator between them was trustworthiness. Real estate investors as a whole are simply not willing to work with an agent that they cannot trust.

My first encounter with one major-league investor, for example, almost ended within minutes of taking a seat in his office because he suspected me of falsifying the numbers on a strip center I presented to him. I made an honest defense concerning my character and luckily dodged a bullet, for eventually he did buy the strip center from me and at the end of the day we even became close personal friends and did close several more transactions together.

On another occasion I met with one particular mom and pop investor that I felt did trust me at first glance. Nonetheless, months later after we did complete a couple of very profitable transactions for the investor, it was told to me that following that initial meeting both husband and wife had to be in agreement that I could be trusted before they would work with me.

The point is that you must never try to scam the investor. Even when presenting a rental property listed by a colleague; if the numbers don’t add up, don’t defend the colleague, defend your customer. Convey in no uncertain terms that you will confront the listing agent and uncover what the true numbers are before going any further. Bear in mind that it’s okay for you not to know the facts, just be sure to admit it and then make it your job to find out.

The Investor Comes First

What this means is that you would be willing to advise when a rental income property doesn’t appear to be in the investor’s best interest even if its costs you a commission. I know it’s painful but it could gain you a real estate investor’s loyalty that may possibly lead to many more deals and commissions down the road.

The important thing is that you are perceived as one who genuinely cares how the investor spends his or her money and are committed to “partnering” with them to find the most profitable investment property possible.

You Understand Investment Real Estate

Here is where the rubber meets the road because winning over an investor requires that your good character also be supported with a working knowledge about real estate investing. Unless you are adequately prepared to discuss cap rates and other rates of return surrounding rental properties, chances are that you may only be invited to the investor’s barbeques and never entrusted with their investments.

In other words, do your homework and learn about the nuances of real estate investing so investors can be confident that you know what you’re talking about. This doesn’t require you to become an investment expert, but at the very least learn what a cap rate, APOD, and Proforma Income Statement are and how they might affect an investment decision.

If you’re truly serious about selling to investors, you should also consider buying a real estate investment software solution. I know that it sounds like a shameless plug for my software but it really will benefit your business when you are “prepared” to run the numbers on any particular income property for an investor on-the-spot.

Fair enough.

What comes next, of course, is just good old fashioned hard work; you will have to spend time in trenches for it all to manifest. But if you take it to heart, your effort will not go unrewarded.