As a real estate agent or broker working with investor clients, you need to know which characteristics make one property a better purchase than another when using leveraged financing. Providing the data your client needs in selecting a property is a large part of the job.
1. Buy Below-Market Rents and Raise to Market
For a variety of reasons, there are rental properties on the market that have tenants currently paying rents that are less than market rates. Your goal as their real estate agent or broker is to identify and assist your client to acquire property valued based on below-market rentals.Subsequently increasing rents to current market rates will provide a good return on investment whether held or re-sold. Financing risk is lower for your client when you can help them to improve the loan-to value ratios in this way.
2. Identify an Improving Neighborhood and Buy In
A thorough knowledge of your market area helps with this strategy. Keeping up with changes in the job market, incoming new businesses and zoning changes will enable you to provide your clients with purchase opportunities in neighborhoods that are at the front end of an improvement cycle. Finance risk will decrease faster than surrounding areas as values will climb faster in this neighborhood.3. Locate Properties Priced Below Market Value
This one is, of course, the most obvious and practiced strategy. In the context of leverage, the buyer who must use financing with low down payments will fare better risk-wise if they can purchase below market value.As their real estate agent or broker, your ability to ferret out properties priced at a discount to market value will be highly prized by your investor clients.
