| Investing

We’re always behind a DIY, can-do attitude, but it helps to have an expert in your corner when it comes to real estate investment. If you see yourself becoming a landlord, buying an investment property calls for a profit-focused strategy that ensures you a) cover your costs, b) generate a respectable rental income and c) build equity for the best possible return on your investment (ROI). Here we look at the importance of choosing an investor-friendly real estate agent to boost your ROI potential. We also share some tips to help you find one. 

Why an Investor-Friendly Real Estate Agent Counts

An investor-friendly real estate agent doesn’t just find properties. They have an intimate knowledge of the real estate market while also understanding investor tax benefits, how to estimate ROI and focus on matching your investment goals to the right type of property. 

Information and education are critical when making decisions about real estate. The following resources are here to help:

Top Qualities of a Trusted Investor-Friendly Real Estate Agent

An investor-friendly agent is:

Well-connected

Well-connected real estate agents can deliver the types of properties that provide the best ROI. How? They have a network of trusted agents eager to sell properties quickly, which often includes what is known as “off-market” properties. Because they know a lot of people in the biz, fellow agents always know what we’re looking for and will approach us about excellent investment opportunities that haven’t hit the market yet. These insider tips might be illegal for traditional stock investments, but they are par for the course in real estate. It’s all about keeping our ears to the ground, getting the message out about your needs, and pairing the two to bring you the best possible investment opportunities. 

Why it’s essential: Existing relationships are gold for investor-friendly agents. We take years to build trust and create meaningful connections in the industry that help streamline the purchasing (and selling) process. As a result, you reduce the risk of facing bidding wars and instead can make a quick offer and strike lucrative deals that deliver the best ROI. 

A FULL-TIME real estate agent

Inexperienced real estate agents start out working part-time, too worried to “quit their day jobs” in case they fail. Unless the agent is working full-time, you want to avoid them because that precarious transition will interfere a) with their availability, b) with their connections, and c) with their experience/knowledge. Although you can find the odd part-time agent killing it, they are far and few between. The only ones you can feel more confident pursuing would possibly be the agents easing into retirement. 

Why it’s essential: Selling real estate as a side hustle lacks commitment, knowledge, and experience, which negatively impacts service. A lack of availability can delay getting in an offer, so you miss opportunities. Perhaps more importantly, they are less likely to find lucrative investment opportunities that are SAFE.

In the know about the micro-market scene

Micro-market isn’t just a buzzword. It’s a real thing and very important to find the best real estate investments. Every neighbourhood in the GTA has micro-markets. It might seem complicated to believe that a few blocks or streets within an area’s perimeters can make much difference, but it does. All kinds of factors make an investment property more attractive to not just you but also the tenants you hope to attract and retain. This includes factors such as:

  • Schools
  • Restaurants
  • TTC connections
  • Parking
  • Crime rates
  • Amenities
  • Zoning regulations
  • Gentrification
  • Green space
  • Recreational facilities

Micro-markets are the difference between a five-minute walk to the streetcar stop and a 20-minute walk or being across the street from a park frequented by dicey folk and a park that’s full of happy dog walkers, families, and joggers. These details impact what you’ll pay, what type of tenant you’ll attract, and what you can charge your tenants. 

Why it’s essential: Market knowledge dictates how smart a purchase you’ll make and how profitable it will be. 

Often an investor themselves

Although not always necessary, it certainly helps if your real estate agent is a property investor or has invested in the past. This enhances their knowledge through good old-fashioned trial and error, and they can pass that knowledge on to you. 

Why it’s essential: It tends to be easier to take advice from someone who knows of what they speak! 

A tough negotiator

How much you pay impacts a long list of investment considerations:

  • The mortgage amount you’ll need to cover with rent
  • The amount of rent you’ll be able to charge
  • The amount of rent that you can pocket each month
  • The other costs that will eat into your profits, such as property taxes and condo common element fees
  • How quickly you build equity 

We negotiate on your behalf to ensure what you pay never interferes with profitability. 

Why it’s essential: An investor-friendly real estate agent will understand how far they can go when pushing for your requests and target the lowest price you can offer without losing your opportunity to buy the perfect property. 

Analytical

Because the amount you pay is not the only consideration when buying an investment property, you need an agent who understands how to crunch the numbers. The numbers dive into the expenses of owning the property, such as property tax, insurance, and average vacancy rates that negatively impact what appears to be the ideal price on the surface. 

One of the most important numbers to consider is the capitalization rate. Known as the “cap rate” in the biz, we can estimate your potential ROI based on: Capitalization Rate = Net Operating Income / Current Market Value. But, to come up with the rate, we need to understand the average monthly rent for similar rentals in the area. This number is multiplied by 11.5 which is a year’s worth of rent, less a two-week per year vacancy, to tell you the estimated maximum amount of gross income expected. Next, the operating expenses, such as property taxes, maintenance fees for condos, utilities, etc., are subtracted to get your net which is then divided by the purchase price. Multiply that by 100 to see the percentage of your estimated ROI. We use our deep market knowledge to crunch the most accurate and current numbers. Ideally, your cap rate should be between 5% and 10%, BTW.  

Why it’s important: You’ll understand potential profitability and not be caught off guard by hidden expenses that eat into your rental income. 

Reno savvy  

Spotting diamonds in the rough and understanding the types of renos required to get top dollar for rent is also a big benefit. For example, on your own, you might find a low-priced house that you decide to buy, invest thousands of dollars in renovations, and then discover the going rent in the area will never allow you to recoup your investment. We understand the maximum amount you should invest and the types of renos required to see the top rent for that specific area.  

Why it’s important: You can get more value on unexpected finds in the right neighbourhood without overinvesting in unnecessary upgrades the area’s average renter won’t be willing to pay for.  

Understanding of the landlord’s life  

We understand what being a landlord involves. As a result, we will help steer you clear of high-maintenance properties that turn a passive income into a high-demand active investment. Landlords want to avoid becoming full-time property managers since most are doing this as a side hustle. We can recommend properties that have the lowest maintenance, so you can enjoy the benefits of a passive investment. That said, we’d advise avoiding agents that also claim to be property managers. This is one of those situations where you need to wonder which role they’re better at — the real estate agent or the property manager. Always choose an agent for their investment expertise and leave the property management up to a full-time provider.  

Why it’s important: Understanding landlord life makes life easier once you own the property.  

Thinking about buying or selling an investment property? It’s a little different than in the residential market. The following posts will help:

The Bottom Line

An investor-friendly real estate agent provides an inside line to the best investment properties. You’ll have an experienced agent in your corner, ready to scout out the best opportunities, use analytics and comps to ensure you are making a smart investment, and reduce the efforts required to manage the property while increasing your ROI. 

If you’re looking for the best investor-friendly Toronto real estate team to guide you on making wise property investment decisions, call The Christine Cowern Team at 416.291.7372 or email us at hello@christinecowern.com. We’d love to work with you!