The question was, "How do we deal with investors in the real estate world?"
And, "Should we?"
And, of course, the answer to that is, sure we should deal with real estate investors.
They bring us business as realtors.
But the whole idea is this, they're looking for real estate agents who are experienced
and who are knowledgeable in the investing world.
That's a very simple process if you look at it carefully.
When it comes to real estate and investors, they're making to make profit.
Simple as that.
They're looking for good return on their investment.
They're going to put money down on a product, which of course, is real estate, and they're
going to want to see some kind of cash coming back towards them.
Now, there are two types of ways to get cash back.
There's immediate cash back.
There's immediate return on your investment, and there's long-term return on your investment.
Now, most investors, or a lot of them at least want immediate return on their investment.
We call these people flippers.
They want you to go out there in the real estate world and find them a good deal, something
that's, of course, discounted if you can find that.
So, of course, what they want you to do is find them a discounted property if you can
find that nowadays.
They're going to get this property.
They're going to fix it up.
They're going to invest some money on it, make it look pretty.
Then, of course, they're going to put it back on the market.
They're going to hold on to it for a very short amount of time because the more time
they hold on to it they're losing money.
They want to get this property, fix it up, invest a little bit more money on making this
super nice, and then throwing it back on the market hoping somebody comes along, pays a
top dollar for it, and there comes the profit.
I've seen this happen over and over and over in my career.
I've had investors come to me and say, "Rico, find me a great deal."
This happened to me not long ago.
I want to say the latest one that happened to me was maybe a couple years ago.
Property here in Inglewood, California.
And I actually had the listing and the listing was a house that was completely in shambles.
I mean, it was in shambles.
You would think that the average family, there was no if's and their but's, the average family
was not going to buy this house.
But then who was going to be interested in something like this.
A investor.
The investor has vision.
The investor says, "Wait a minute, I can make this ugly house ..." sometimes as they call
it, "I can take this ugly house, put new products in it, new appliances, paint the inside, new
roof, new everything.
It's a complete new product now."
That's what they do.
So they get this ugly house, one I had here in Inglewood, they got this ugly house.
It was pretty bad.
They went in there and just completely remodeled it.
They bought it for mere, listen to this, they bought it for a mere 240, put $30,000 into
it.
They put $30,000 into it and they put it back on the market for 420.
Now you do the math.
In other words, a hefty over $100,000 profit for them.
That's what we call flipping.
Now, those days may be far and gone.
There might be a few good solid deals though that we can find it but investors come along,
fix it, put it back on the market and make money.
But most investors nowadays, what they're looking for is long-term return on their investment.
What that means is this, they get properties today, put their down payment.
Purchase the property.
Put renters in there and as the renters are covering their mortgage payment, the renters
go in there and start paying the rent and that rent is used to pay the mortgage for
the investor.
That make sense?
Now, what they're doing is this.
Let's go again.
The investor buys a property.
Investor now has a mortgage on this property.
Let's assume that his payment is $1,000 on this property he just bought.
The payment is $1,000.
He puts renters in there.
The renters now live in the house and the renters pay, let's say $1,500 per month.
The payment to the investor is $1,000.
The rent that's being paid is 1,500.
That's a profit of what?
That's right, 500 bucks.
So every single month the investor is making $500 profit.
In the long term, because we know real estate is cyclical.
We know that in the long run, it's going to go up and up and up and up in value.
What does the investor do?
Eventually, when that property is way up here in value, what do they do?
That's right, they sell it and there he makes his long-term return on investment.
Make sense?
Do we want to deal with investors?
Are you kidding me?
Of course, you want to.
It's just that sometimes it's difficult, sometimes it's difficult to find that one good solid
diamond in the rough.
Sometimes it's hard to find that one good deal and that's where you come in.
You have to go out there and research it and find it.
You help them buy this property, you get the commission.
He fixes it up and sells it, he's going to hire you, you get the commission.
There's double commission to be made.
You're going find it for them, represent them on the buy and you're going to represent them
on the sale.
Make sense?
Hope that helps you.
Mark Twain once said, "Buy land, they're not making any more of it."
Investors know that.
And Will Rogers once said, "Don't wait to buy real estate, buy real estate and wait."
Make sense?
It's all cyclical.
Investing, is it a good thing?
Are you kidding me?
You with the real estate license, once you get your real estate license, listen up, you
might want to become an investor.
Hope you learned something today.
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