You likely already know that generating consistent business is extremely challenging. It can take months of prospecting to find clients. It takes even longer to build the kind of reputation that encourages clients to sign on with you. And when you’re juggling prospecting, keeping that pipeline full and building a buzz-worthy reputation, if any ball drops, it can kill the whole act.
That’s why the top producers typically maintain their position — they’ve already done the legwork and put in the hours it takes to be on top. It’s also why so many newer agents struggle to get traction.
Unfortunately, no secret gives you a shortcut to avoid all the hard work.
There is, however, a source of business you can tap into that’s more steady than individual homebuyers or sellers. And it’s one that many agents tend to avoid because they don’t understand it: Tap into real estate investors.
If you’re willing to step outside your comfort zone and learn how to work with these high-volume buyers and sellers, you can tap into a more consistent stream of business that will:
- Produce the sustainable cash flow you need to thrive through the gaps in the market cycles.
- Provide a solid source of business for new agents who are just getting started and don’t have a solid book of business yet.
The key to getting into this niche is understanding the mindset of the four real estate investor avatars.
4 investor avatars you should get to know
Although every person is different, real estate investors typically fit neatly into one of four avatars. Understanding how they think will help you to land them as a client and to serve them well.
The newbie
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We’ve all met the newbie real estate investor. They’ve binged every episode of Flip this House and can tell you everything about Chip and Joanna Gaines. They’re super excited, but typically, they’re not very knowledgeable, which can create challenges.
For starters, they will need a lot of hand-holding, even more than a typical homebuyer. That’s because their enthusiasm will often hide their fear, which can stall or even kill a deal with smokescreen objections. On top of that, you might have to educate them away from poor decisions.
And you’ll have to prequalify their finances. Many have misconceptions about financing rental properties, so it’s essential to make sure they can close.
Although the newbie can be a lot of work, they can also become a lifelong client if handled correctly. Remember, every successful investor was once a newbie.
The do-it-yourselfer
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This avatar can be challenging. The do-it-yourselfer might already have one or more rental properties in their portfolio but no track record of success. They’ve gotten into real estate but haven’t yet weathered the ups and downs of the market.
The problem is that they tend to treat services like commodities, including your services as an agent. As a result, they will often try to negotiate your commission down.
But it doesn’t stop there: They will likely also negotiate with any other service providers they connect with through you.
Some degree of negotiation is acceptable. We all do it.
But you’ll have to determine how far they will push it so as not to risk them damaging your relationships. If you feel that they devalue and demean others, it’s best to pass on this prospect — no matter how much you might need the money.
It’s also worth noting that the DIYer can be difficult to please and may not have the financial ability to survive a market downturn. If that happens, they will likely blame you.
The gambler
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The gambler has money to burn, is impatient, and believes they can create wealth in any market.
They’re often fueled by success in other areas of their lives. Maybe they’ve built a thriving business or got lucky in crypto, and they believe that is a sign of their financial genius.
It’s a classic case of the Dunning–Kruger effect. If you’re not familiar with that term, I highly recommend you look it up because it will be helpful in screening prospects and evaluating your own capabilities.
This avatar has the financial means to close on a property but might wear you out looking at a wide array of listings before ever investing. And they will likely waste a lot of your time trying to convince you how smart they are in the process.
If you run into the gambler, you need to screen them very carefully.
The professional
Although they are rarer, the professional is the avatar you want to set your sights on.
They come to the table with capital, experience and focus. But because of that, you need to bring your “A” game to provide value, which means you have to understand both real estate and real estate investing.
You have to be able to identify the properties that best meet their investment objectives and not waste their time with ones that don’t. Remember — your job is not just to show them properties. Your job is to help them find the right properties.
They treat this like a business because, for them, it is. So if you want to earn trust, you need to treat it as such.
With this avatar, you’ll have to put in more work proving your worth initially, but you’ll spend far less time hand-holding, educating or helping them get financed. These investors also tend to make decisions quickly.
Putting it into practice
In an upmarket, you’ll often find a lot more “investors,” but many will be newbies, DIYers and gamblers. Money seeks investment yield, and real estate is highly sought after when it’s up.
When the market corrects, it will push many of those avatars out of the investment market, and only the professionals will remain.
But that’s is a double-edged sword. It gives you a better perspective client, but it also requires you to provide more value from the get-go.
It’s also critical to trust your gut and use discernment. You have to be willing to say “no” if a prospective investor client doesn’t fit your criteria. Trying to be all things to all people is a formula for failure, and it will make you miserable.
The key is to identify which type of real estate investor you want to serve and then serve them better than any other real estate agent in your market.
It’s as simple as that.
Dr. David Phelps is the CEO and founder of Freedom Founders in Dallas. Connect with him on LinkedIn and YouTube.
