Still talking about rental rates, it amazes me how many listings I see where agents focus on how great of an investment a specific rental property is, but price it far in excess of its net present value. In fact, for many of the duplexes and four-plexes in my area, property owners have priced their properties with CAP rates of one to two percent (CAP rate simply being the net operating income divided by the sales price.) Unfortunately, investors are buying these properties and spending more on the mortgage than they can ever hope to make.
A tool that I teach my agents to differentiate themselves in the investment property niche is a simple investment analysis calculator. If the agent has a client that is buying or selling an investment property, one of the services that the real estate agent offers is a full investment analysis on the property. I teach my clients to use the IP Ware software (which we provide with the 4MySales system) to create a comprehensive investment analysis for the buyer or seller to use.
Most investment property owners bought the property because they thought they could make a buck. However, very few understood whether or not their investment would actually provide any type of return. As a result, many investment property owners are now getting badly burned; and some are even blaming their agents. By including an investment analysis as part of your service offering, real estate agents that specialize in the investment property niche can significantly increase their value proposition to their clients. Fortunately, many investment property owners who buy properly make money that they leverage into even more properties. For some agents these services even result in life-long business partnerships with people interested in investment property.