Real estate professionals said keys to selling investment properties include focusing on returns and thinking like a financial planner
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When David Bramante first got into real estate, he was embarrassed by his job. It was the early 2000s, and Bramante told Inman that at the time he opted against publicizing his status as an agent on social media, and had a lingering feeling that he “should’ve been an attorney, or something bigger.”
But today, with nearly two decades of experience under his belt, Bramante has built a successful and highly public career as an agent, investor and co-founder of multiple real estate-oriented companies.
So what changed for Bramante and finally got him to fully embrace life in real estate?
Turns out, it was working with investors.
“I was helping people get rich,” he recalled.
Bramante’s experience highlights the potential rewards — which can be both monetary as well as more abstract — that real estate agents stand to reap by working with investors. However, deciding to make that transition and actually succeeding at it are two very different things, so here are some basic steps for agents looking to beef up their ability to sell investment properties.
Think like a financial planner
Though Bramante today spends more time on his businesses and less on actually selling properties, in his early days as an agent he could often be found creating spreadsheets, conducting surveys and building models that show “if we do X then Y happens,” he said.
The point of all that work was to build up a deep understanding of how investment markets function so that he could better advise clients on the types of properties to purchase or sell. Though agents themselves are not dedicated financial advisors, Bramante recalled sitting in rooms with clients and their accountants as they all strategized about what to do with a property. This happened, for example, when a client inherited a property and needed to come up with a strategy for how to make money from it.
Bramante also encouraged agents to grow their understanding of specific financial tools and procedures such as 1031 exchanges, which allow owners to avoid certain taxes when selling and then buying properties.
“It does feel at times like you’re more of a financial planner than just a Realtor,” Bramante added.
Prep the properties
This sounds obvious, but when it comes to investment properties, there are some unique considerations when it comes to actually getting properties ready for the market.
Michael Nourmand, president of Nourmand Associates in Los Angeles, told Inman that one essential step is making sure rents are as high as they can be before the property goes on the market. This makes the listing more appealing to investors who want to maximize their returns, and is a significant enough step that Nourmand said he might actually wait to list a property if the window to raise rents is approaching soon.
Nourmand also advised sellers and their agents to make sure the outside of investment properties are presentable. So, that means getting the paint, landscaping and other outside features in as good a condition as possible.
Obviously that advice holds true for any property on the market, but it’s even more important when trying to attract investors.
“Sometimes, if it’s four units or more, you can’t see the inside unless you see an offer,” Nourmand said, explaining that the exterior of a building is often the only thing an investor looks at in person before making an offer.
Study and get certified
Bill Lublin, CEO of Century 21 Advantage Gold in Philadelphia, got into real estate decades ago and started investing himself because he realized he “entered a business that had no pension plan” and had to build his own. He told Inman that agents would do well to acquire professional certifications such as becoming a certified property manager (CPM) — designation bestowed by the Institute of Real Estate Management.
Lublin also suggested becoming a residential management professional (RMP), which is a certification offered by the National Association of Residential Property Managers.
The idea here is that in addition to opening up new potential career paths in property management, getting these types of certifications helps agents understand the kinds of considerations investors and their managers are making once they own a property.
But whether agents officially get certifications or not, Lublin suggested they at least do their research.
“Talk to current investors to learn what they value and how they buy,” he said. “Read a book about being a landlord, or work with a property manager to understand what’s important to landlords.”
Think critically about marketing
Successfully marketing properties to investors involves focusing on the things that they care about, which according to Lublin fall into four categories: income, depreciation, equity and appreciation.
“An investor looking for income to supplement their retirement, for example, might be less interested in what the property will sell for in 15 years, while an investor buying for the long term might not care if the property generated immediate income,” Lublin pointed out.
So, understanding those categories and explaining to would-be buyers how a property accordingly generates income is a keep part of marketing, and selling, investment properties.
In order to effectively convey that kind of information, Nourmand recommended putting together a presentation that shows how much income a property generates, how much each unit pays in rent, what the security deposits are and other financial details. He also suggested agents include data about the surrounding area, such as median incomes, population size, market rents and nearby amenities.
This presentation represents a fundamental difference between ordinary residential real estate and the investment world, with Nourmand noting that “usually when you sell a house, you don’t include all that information.”
And in the end, Lublin also said that it comes down to “how the property generates returns for the buyer.”
“Simply put, it’s all about the numbers,” he concluded, “and though good photos and descriptive language are still important, keep the marketing focus on the returns.”