Ep040: The Niche that Makes You Rich – Working With Real Estate Investors

Chris McAllister: Welcome to the Connect Practice Track and Grow podcast, brought to you by ROOST Real Estate Company. I’m Chris McAllister, and I’m here with my co-host Laci LeBlanc. And on today’s episode, we’re tackling a topic.

Most agents, or a lot of agents avoid working with residential property investors. So we’ve invited one of the best, uh, realtors we know to join us. Our Director of Sales, Priscilla McNamee. Good morning, Priscilla. Good morning, Laci. 

Laci LeBlanc: Good morning. Good morning. 

Chris McAllister: Priscilla’s got years of experience working with, you know, retail buyers and sellers.

But she’s also got what is it, close to 25, 30 years of working with investors as well. So she’s gonna help us unpack what agents really need to know about successfully working with investors. A lot of agents think investors are too demanding to disloyal, or in some instances, just too much math.

But the truth is, when you learn how to serve them, investors can be your most loyal repeat clients and they can help you build a bigger and a more resilient business. 

Laci LeBlanc: So I think that’s really interesting. ’cause I don’t as, as somebody who comes from a family, invest of investors, right? I don’t see them that way at all.

Obviously I’m related to them. They’re my nana and my dad and my uncle, you know? So why do you think so many agents are afraid of investors? Or why do you think they have these kind of preconceived notions about them? 

Chris McAllister: Personally, I think a lot of times agents are put on the spot. They, they’re showing a property and then they’re asked questions that may have to do with things that only investors would think about or that, you know, traditional buyers and sellers, retail buyers and sellers don’t think about.

And I, you know, I, when I got my license, and this was 25 years ago now, I was learning by doing, but I had basically the same week that I. The same month that I got my real estate license, I bought my first rental property. So, you know, when I started working with investors, I still might have not have known what the hell I was doing, but at least I was in it and I was, able to, actually learn from them and let them know that, you know, I was learning as, uh, as I was doing.

But I think it’s. I think it’s because most realtors, they’re not taught how to think like investors. Right. You know, real estate school trains us to, I wouldn’t even say it trains us to serve retail homeowners or you know, I think that real estate school, for the most part, trains us, you know, in what we need to know.

The past, the state test, but sometimes with your investors and that conversation turns to return on investment or cap rate. You know, a lot of us just freeze because. I, I know this sounds stereotypical, but a lot of us agents don’t care for math. You know, we’re really good at 3%, don’t get me wrong, but as a rule, you know, doing math and figuring out these equations is just something that’s natural and it’s not something that’s necessarily taught.

I mean, what, what, what have you seen Priscilla in your career when, when you’ve worked with investors? I know you’ve worked with several throughout the last few years. What have you found? 

Priscilla McNamee: I completely agree with you on that. And I do, I think it’s extremely important, like you said, that you allow your investor to know that you’re learning from them as well.

I mean, we’re not know-it-alls, let’s face it. Um, and a lot of them have more experience out there than we do when it comes to you know, buying those investment properties. So, I mean, I’ve learned quite a bit from investors that I’ve worked with, that’s for sure. 

Chris McAllister: Yeah, and I think that it, as long as they know you’re trying, as long as they know that you’re, you know, gonna, if you don’t know something, you’re gonna say you don’t know something and you’re willing to learn.

That is, you know, sadly, a rarity in our business and a good investor, an intentional investor, somebody who’s in it for the long term, you know, they’re gonna latch onto an agent that is, is going to try to understand their business and understand what their, what their true goals are. So I think that’s why.

Working with investors is such a great niche and you know, that’s, that’s the title of this. It’s working with investors could be the niche that makes you rich. And, you know, Priscilla, you and I work by referral. It’s our whole life and it’s just nice to have clients like this that keep coming back and coming back because we, you know, doing everything we can to help them meet their goals.

Priscilla McNamee: Absolutely. And I think right now, especially like we have a lot of investors, um, that are inquiring in our market from the west coast, but a lot of them have misconceptions of, um, some of the properties. So it does take an agent who is bold enough and willing to. Give them raw numbers and give them a really good idea of what the market is and not just let them, not tell them everything they wanna hear.

Um, right. I don’t wanna set, I don’t wanna set them up for failure, especially when they’re 3000 miles away. 

Chris McAllister: Exactly. Well, and that’s interesting. Yeah. It doesn’t 

Laci LeBlanc: sound like it’s unlike, other niche like marketing for example. Right? If you have a great understanding of marketing, then even if you don’t know the specifics of digital marketing, right?

Then you’re going to be able to identify your target audience. You’re gonna be able to, you know, know the messaging. Uh, you’re gonna be able to think of, think in channels. So if you have that kind of base knowledge, right, like a real estate agent does, then you’re gonna be able to apply that. To these other niches.

Um, so I think that’s a really important point, Priscilla and and Chris, is that you want an agent who knows the ins and outs of buying and selling properties, of purchasing properties and acquiring properties because those are the things the investors don’t have, right? So I think it’s really important, like you said, that you let them know you’re learning from them as well.

But I don’t want to undermine the value of a really good real estate agent in these transactions with investors either. 

Chris McAllister: Yeah, I think that’s true. But the other thing is telling the truth, right? And a lot of times these folks, and this happened during COVID, you know, we had people from all over the world buying properties in Ohio during COVID site unseen.

And it was a special agent that understood what their goals truly were, but also had the. I don’t wanna say integrity, but the wherewithal to push back and say, you know, I hear what you’re saying about this, but you know, this house that, you know, you can buy for 50,000, it’s gonna cost you 50,000, you know, to, to put this back into service again.

And, part of being a. A agent or a broker that’s in demand for investors. It’s, it’s first being a fantastic agent. Secondly, it’s being able to at least understand the math they’re using and what their financial goals are. And third, it’s a, at least a Rudi rudimentary understanding of I don’t want construction, or at least what it means to have a house being rent ready and inhabitable.

And I think a lot of folks miss that during the last, uh, you know, big run we had during COVID. 

Laci LeBlanc: Yeah, property management is being in the property management business certainly helps, I think, um, understand, whether an, an investment is a good investment or it could be a problematic investment.

You guys talked a little bit about this, but I wanna hear what your first experience was working with an investor as an agent and how that, like, how, how that felt and kind of what the outcome was. 

Chris McAllister: Do you wanna go first? Do you want me to go first? 

Priscilla McNamee: You go first. I’ll let you go first. 

Chris McAllister: So I’m trying to 

Priscilla McNamee: think of my first experience.

Chris McAllister: Well, so for me, I, I did have quite a few agents or quite a few investors that I was working with early on, and part of it was because. People, I, I was eager to share that I was also buying in investment properties at the time, but after the crash, you know, when everything got ridiculously cheap in 2009, 2010, I started working with my attorney in town who.

Actually, Tom will tell you that, uh, he’s a real estate investor that does, uh, practices law on the side. So these are, this is a family that had a tremendous amount of real estate experience, but they didn’t have an agent that you know, could keep up or, put up with what it took. To find deals that really made sense and penciled out because you know, this family, they’ve been at it for generations.

They have very clear, very strict financial outcomes that they aim for, and they don’t take unnecessary chances. It took me a long time and a lot of Sunday afternoons looking at a lot of properties to start to understand what they were looking for and how the math worked. Right. You know, we talk a lot about, you know, doing a, a thumbnail.

Calculation in our heads and you know, it got to the point where we would be able to look at a property, and, and, and I’m telling you, for at least two and a half years, every Sunday afternoon we were out looking at foreclosures and, and properties for sale. And it got to the point where, you know, we were so in depth, or I was so in depth that, you know, we could come up with immediately what this property would rent for fixed up.

We could come up with a, quick guess at. What it was gonna cost to fix it. And based on that and the fact that we knew, I think we used like 60% I, you know, of if, if something was gonna rent for a thousand dollars, then you know, basically after. All the stuff like taxes, insurance, and all that, you know, you’d, you’d probably get, what is it, 40 cents on the dollar, let’s say.

So if you had, uh, say that 40 cents on the dollar was $400 a month, or 48,000, and you wanted a 10% cap rate. And I know I’m going too fast. And we actually have a neat little training thing coming out, um, that you’re gonna be able to click on by the time you see this podcast to get all these down and dirty equations.

So you can do ’em in your head as well. But basically, if it was $4,800 a year that you could anticipate in profit for that house that you’re walking through, then you should have no more than, and this is an extreme case, but that property, you should not pay more than 48,000. So if, if you wanted a 10% cap rate, if you’re gonna make $400 a month, then that property can’t cost more than 50,000.

Now let’s say that property is 50,000, but you know it’s gonna cost you $15,000 to fix it. So your offer is $35,000. Back in, post crash times, we could buy houses all day long for less than 35,000, put ’em back in service and make money doing it. Now again, that’s an extreme case and I know I’m probably just making people that much more nervous because of, you know, trying to do this math in my head.

But that’s the kind of quick and dirty ROI calculation, or quick and dirty purchase offer calculation that we as agents working with investors need to make. And you’ll notice the list price drove what we looked at, but the list price never once enters into our thought processor calculation about what that property is truly worth to a successful long-term investor.

So. I learned so much from them. They’re still friends, still clients. There’s just not much to buy these days. Right. So we, we don’t have Sunday afternoons together anymore. But I, and I think that goes back to just an extreme example of how, you know, your, your clients are gonna teach you so much and what they get in return is somebody who’s gonna be there when they need them, you know, does what they say they’re gonna do, show up, and, and is willing to, you know, keep up with the volume because a lot of these guys buy a lot of houses.

So that was a lot. Well, that’s 

Laci LeBlanc: another, that was another really good insight though, is that every portfolio, every investor is different. You know, just like working with home buyers and sellers, you know, the basis of knowledge that you have to have is there all those terms that you throw out across all the calculations you have to make.

You have to know that regardless. But not every investor has the same goal. Um, not every investor has the same portfolio. Not every investor is, would be interested in the same property. So being able to be flexible on the spot and to get to know an investor, it’s really relationship based, just like the rest of the, the real estate business.

It is the way that, the way we do it, right. 

Speaker 4: It is. How about you Priscilla? 

Laci LeBlanc: What’s your, what’s your first, um, experience with an investor or one of your firsts? 

Priscilla McNamee: Probably, I mean, it was actually a really great experience. I mean, they were people that I knew, so they were very forgiving. Let’s That’s right.

That way. Um, following the same numbers that Chris is talking about. But through time, and I have, I’ve sold a lot of properties for them also, after they’ve picked up a lot of properties on their own, I’ve sold them properties and then we’ve in turn sold those properties. The great thing about working with investors like that though is that in today’s market, which is something that I really like, I’m kind of like switching gears here.

But like with all of the new NAR guidelines, with commission and everything for example, I’ve got a set of investors that I have sold probably, I think we’re on our 10th property this year. I can structure an offer adjusting my commission to be way more competitive against other agents in a competitive multiple offer situation is what I’m trying to say.

So like, I’m gonna, what, I guess what I’m saying is I am willing to. Cut them a deal on commission basically, in order to leverage their offer to get their offer accepted. And it’s worked, right. Because like I said, I’m selling them so many properties that I’m, I’m making money. They’re, they’re great repeat clients.

Um, they also sell properties with me. So it’s just, it’s a great relationship and there’s a level of loyalty there that. I have with them that you, you gain with these investors, which is so nice. Plus they also know, like for me especially, uh, when I sit down with an investor, I always let them know that I don’t have another investor that is competing in the same arena as them.

So I make, and I also let them know that I am not competing with them. So I’m not an active investor that’s out there bidding against them on any of these kind of properties that they’re looking at. So I think that gives them, um, a lot of encouragement. They have faith in me and they feel comfortable working with me.

With that being said, 

Chris McAllister: yeah. Yeah, I think that’s, that’s it. Excellent point. But you’re, you’re coming at it, Priscilla, from the perspective as a, being a business owner yourself, and that’s one of what makes you successful is you look at your real estate practice as a business and you know that if you’ve got a client that’s gonna come back to you year after year after year, and at some point they’re gonna liquidate those properties and you’re gonna be the listing agent.

And if you. I hate the word discount, right? That if you you know, have a strategically 

Laci LeBlanc: reduce 

Chris McAllister: a strategically reduced investor, buyer, agent, uh, friends and family rate, that is just good business and you’re not giving away the farm, you’re still making money. And quite frankly, the very best investors out there want us.

To make money, you know, as their agents and so forth. And the same with our clients in the property management business. None of those folks want us to, uh, they all expect us to make money. They all expect us to make enough money to, to live and live well and to be here next year. And, but that doesn’t mean that, we don’t understand that in a competitive market.

That it doesn’t make sense, like you said, to, you know, make a str a strategic, uh, fee arrangement, I guess. Yeah, and it’s not that much different than what we do for, you know, our, our property management clients. You know, we have a, we have a set rate that we advertise to the public, but, you know, if we have, uh, investor clients with 20 plus units or I, uh, you know, there’s a a 20 plus unit fee rate.

That’s different than a, you know, one to 10 unit fee rate. And as we move forward and we start actively courting institutional investors, there’ll be a new fee rate for those owners that have 50 plus properties. But that’s just, that’s just smart business. So congratulations. 

Priscilla McNamee: I appreciate that. Well, plus, I mean, the referral business that they send as well, so I mean, it just, it offsets, it all makes it, it comes full circle to you.

Yeah. 

Chris McAllister: And that’s, that’s why it’s the niche that makes you rich. 

Priscilla McNamee: Well, and I think a lot of agents, they tend to get focused on the right now instead of the future. And they don’t think about that. Like you have a lot of agents that get so hung up on, I want my full fee, and they’re not thinking about, a year, two years, three years down the road.

Chris McAllister: The other thing that’s interesting is investors require, you know, a certain level of performance. Again, they’re very, patient, they’re very helpful. They want to train, but they’re not hiring. You know, God bless you. You’re the most charming person I know, but they didn’t hire and keep you because of your charm alone, right?

They’re, they’re hiring and keeping you because you’re competent. You’re a fantastic realtor. You understand what they’re doing. So that, you know, that’s a huge difference too. It’s not like that investors just magically you get repeat business. You do have to earn that business, and it does come from basic competency and, doing what you say you’re gonna do.

Laci LeBlanc: Yeah, I wanna, I wanna come back to the opportunity and the niche that makes you rich. I wanna come back to investors as a loyal client base, but let’s go back a step and I wanna talk about that competency for just a second. I’m under the impression that as a real estate agent, you don’t get a lot of training in all of those words.

That vocabulary that you threw out there earlier, Chris, that a lot of our heads are probably spinning now. You don’t get, at least I 

Chris McAllister: didn’t, did you, Priscilla? 

Laci LeBlanc: Not at all. 

Chris McAllister: Right. So there’s not 

Laci LeBlanc: a lot of continuing education. Like what would you say is the most, um, extreme thing that you have to learn like outside of your skillset or that agents, the thing that agents struggle with the most, maybe when they start working with investors?

I feel like we need to go back to that competency because, people are thinking, oh yeah, it does sound like a great niche, but I don’t know anything about investing, so where do I even start?

Priscilla McNamee: I think they’re most fearful of the math of calculating their return on their investment. Yeah, 

Chris McAllister: I mean, I think if you talk to any, any agent.

If you talk to 10 agents, I would say eight or nine of those agents. If, if you ask them what was the worst thing about taking the test or the worst thing about passing your real estate license exam, I would bet that seven to nine, at least nine are gonna say it was the math that scared them the most.

Look, I 

Laci LeBlanc: hear you. You’re talking to a journalism major. I like words, letters, pictures. No math here. Thank you. Yeah. 

Chris McAllister: You hear words like cap rate and net operating income and, and all that stuff. You know, we’re not talking about being, uh, you know, ccis right? We’re not talking about being commercial experts.

And, and, and the other thing is with AI and Google, you can basically. Feed, chat, GPT, some basic numbers and say, calculate this, and this for me. So we don’t have to know those things. It’s not a skill set that’s required. We have to know what it is. We have to understand it as a tool, and we have to understand it as a way to, you know, figure out what a property is worth.

But we’ve got tools that can, that can do that for us. But there, I’ve never been to a continuing ed class that talked about how to work with investors or gave, you know, short, simple. Real English language, just us guys talking ways to do quick evaluations on a property. And that’s what I’m excited about, uh, providing with, uh, this new, uh, training that we’re putting together.

Laci LeBlanc: When you talked about how you have felt out of your depth with investors, you know, especially early on when you guys started working with investors, what’s the solution there? What if you’re in the middle of, you know, you’re looking at a house, or you’re on the phone and you’re talking to them about a potential investment, and they ask you something and you just don’t know, like, you know, the, you mentioned honesty, but like, what’s your response to that?

What do you, what do you do in that situation?

Chris McAllister: Priscilla, my flip response is that’s why God made Google, and that’s why I have a cell phone. 

Priscilla McNamee: My response is, let me get ahold of my broker

Chris McAllister: and let them make something up. 

Priscilla McNamee: Oh, no, seriously. I always tell my clients I do not know it all, just because I’ve been in the business for 32 years. I am no expert. For real. Um, this business is constantly changing, but I have a ton of resources, you know, within my office and outside of the office, so I’ll get the answer for you.

Chris McAllister: It’s so funny you said that, that this business is constantly changing, but I would say that the one constant in my 25 years has been investors and you know, when the market’s good for investors, they’re right there with us and they appreciate competency. They appreciate showing up, doing what you say they’re gonna do, and being willing to learn.

And then when things are a little tough right now, the investors are sort of holding onto their cash and then they’ve sort of disappeared. But the, but as long as, you know, you stay in touch as you know, we do at ROOST, you know, as soon as that market changes, you know, they’re gonna be back and, and you know, as soon as we see something, I mean, I’m sure Priscilla, you’re the same way.

I mean, you see houses and you know, you flash, oh my God, this would be perfect for so and so, and you know, you’re getting on the phone and you’re providing value that way as well. 

Priscilla McNamee: Yeah, absolutely. Um, just simple phone calls of keeping them in tune to what the market is doing. For example, there was an auction on, um, a busy street in Springfield that brought quite a bit of money on a double side by side double that I never thought that they would bring.

And I had called a couple of investors just to let them know that, hey. Um, I’m really shocked by this price because that really changes the game for them on some of the properties that they own and some of the properties that we’ve been looking at. And just that simple little two minute phone call. I mean, it just means so much to them because you’re actually thinking about them.

You’re paying attention to the market, you’re staying in touch, and you’re, you know, you’re just giving them that added value. 

Laci LeBlanc: So even in a market when you’re not looking, when investors are not buying, buying, buying, right? Like this market, I feel like keeping their finger on the pulse is something really valuable, like of what the market is doing, like you said Priscilla and Chris, that reminds me of like our best bets and our featured investment properties.

So just tell me about that for, just a minute about how that helps investors kind of keep their finger on the pulse. Maybe talk about our off market opportunities. I just feel like there’s so many things that an agent can do. Uh, for, for investors, and we have some great examples of that. 

Chris McAllister: Well, any agent that’s in our market area, if they’re listening, they’re welcome to go to our website and you hit the dropdown for investing.

And there’s a, uh, link there for the ROOST Investment Gateway. And that’s a super cool. Platform because we, we work with a company called Discover, and what happens is risk all of our MLS feeds, whether it’s Florida, Columbus, uh, Western Regional where Springfield is, or Dayton, the our ROOST investment gateway takes all of that information for every single listing and it runs it through an algorithm and it basically tells you which of these listings.

Could potentially be a great investment property. So it’s like the top of a funnel. It takes all these hundreds, if not thousands of listings and it sorts it out to the ones that actually might make money as investment property. And then what happens is I have like my favorite neighborhoods, my. Not so much just my favorite neighborhoods, but you know, we look after about a thousand doors, you know, in these market areas.

And they happen to be clustered in certain areas. So I set up searches in the investor gateway in these markets where our successful investors are already working. And every morning I get an email from recover. That says this went up for sale yesterday. You know, I click on it, I see, you know, how it looks from a return on investment perspective or cap rate and so forth.

’cause it calculates that for you automatically. So you don’t have to know math. And I click on that and every time I click on it and feature it. On our website, what happens is that those get rolled up into a weekly email that we call Best bets. So when anybody opens up a, a Friday morning email called Best Bets from ROOST and the Landlord Profitability Playbook, you’re gonna know that those properties are the ones out of all the properties that were listed, you know, in the past couple of weeks, that these are the ones that have the best likelihood.

Of being money makers, it’s a great place to start. Now I’m not gonna say that, that it’s, uh, it’s a wonderful thing and it’s opened up this whole opportunity for, great deals. It hasn’t because that’s not the market that we’re in. But that’s a great opportunity. The other thing though, if you’re listening, you know, if you have an investor out there that’s looking to buy some properties, we almost always have an investor.

Or several investors that have a, a property here and there that they’d like to sell, just like our, all of our most successful investors, if there’s one thing that we could do for them, it would be bring them a deal, right? So they’re always looking to buy a great deal. They’re always looking to sell from time to time.

So, you know, it’s, we don’t have any magic off market, you know, great deal situations. But again, when you’re working with a great agent. They’re the ones that are more likely to be informed of one of those opportunities, right before anybody else’s. And if you’ve got a relationship with that investor, chances are they’re gonna call you first.

I don’t know if that answered your question, Laci, but you know, it’s funny, we’re doing everything we possibly can to surface great deals right now, because that’s what our successful investors want. It’s just a tough time in the business. But I will tell you, just like when we, you know, talked last week about investor seasons, this too shall pass.

And I do think that. If not next year, the year after, I think that we will start shifting to a buyer’s market for investors. 

Laci LeBlanc: I agree. So that was exactly the answer I wanted as the marketer in me, um, that wants to promote all of these things. And I wanna emphasize that you said that they’re available to everybody.

You know, we don’t get, keep these things. Absolutely. You know, we, we have the tools and we share the tools because we want people to know what the market is doing and have realistic expectations. I think that’s one part of this. But we talked, so we talked about, um, you know, building these skills. We talked about the tools that you need and kind of the, how you get to be an, an agent who can work.

With investors. We talked a little bit about how investors are a really good, loyal niche, but I wanna, if I can, um, shift gears just a little bit because I wanna talk about some myths that are out there about working with real estate investors. You guys have these conversations with other agents, and I wanna know what you hear most often from other agents about working with investors or another niche that is just not true or that you think is maybe based not quite in reality.

Chris McAllister: I would say that it’s a myth out there that investors only care about price. Yes, investors care about price, but to the end of they don’t wanna buy something that’s not gonna be profitable for them. What they really care about is about performance. They, they care about, being able to buy a property that works within their box.

Now, a good, seasoned, long-term investor, they are not unrealistic. Now, a lot of times, and, and I think maybe this is where, what turns agents off, we do talk to people all the time that, you know, we’ll get on the phone with us as agents. They, they present themselves and investors as it, and it’s turned out they haven’t bought a property yet.

They don’t have a down payment yet. They’ve been listening to BiggerPockets religiously for a few weeks, and suddenly they think they’re an expert. Now, those are the folks that, I don’t know if it even means that they’re coming at it from price, but they’re coming at it from a perspective of they’re already smarter than the rest of us because they’re, you know, even considering buying investment property, you know, a lot of times those people it’s tough to work with them because they’re taught to come at you with a list of 20 questions.

You know, gauging your past performance and how many investor, all that stuff, right? I don’t begrudge them that I if they don’t already know, like, and trust me as a consummate professional, I probably don’t wanna work with them anyway. And maybe that’s just hateful for me to say. But I can tell you that investors, you know, you’ve got buyer.

I, I’ve always taught my agents, you know, don’t work with assholes, right? I don’t care how big the commission is. If you’re working with somebody who’s, who’s impossible to work with, doesn’t value what you bring to the table, you know, treat you like crap, whatever it is, you are much better off walking away and going to get a W2 job.

And I think it’s the same thing with investors. Are there investors out there that are. Are mean, or you know what, what, whatever personalities don’t mesh with theirs. Absolutely. But I will tell you in my experience, it’s investors that understand loyalty. It’s investors that understand the long term.

It’s investors that understand, uh, you know, understand relationships. You, you have a much better chance of, of working with an investor and establishing a relationship that’s positive for the long term, for both of you, honestly, than you do working strictly retail. I mean, does that make any sense, Priscilla, or is that just me being biased?

Priscilla McNamee: Uh, no, I completely agree with you and I do feel like it has shifted quite a bit where investors, like you said, it’s not just about the, it’s not just about profit. I mean. It is, they are hyperfocused on the condition of properties as well. 

I’ve noticed that significantly. But it’s also because Clark County, especially like Clark and Champaign County has, we’ve seen such a significant rise in pricing over the last few years.

So, like you said people are not buying, um, investment properties at the low prices of 35,000 like they were. Previously. So, they don’t wanna buy something for full retail and then have to dump another $30,000 into it. They just don’t wanna do that. So they’re, they’re making smart, wise choices.

They are. Another thing that I’ll add to this is that I do encourage investors as they’re starting to look that it’s okay, like you said, like off market properties. They’re not gonna come just from us. They’re going to be, um, they’re gonna come across to opportunities on their own. And I, I make sure that they know that I’m available for them.

If they have any questions about stuff like that, I’m here for them to give them advice on that, on those types of properties. I’m not gonna charge them for my services. To look over a property like that, that that is my duty as their agent to help them. So, um, and I’ve had clients pick up properties that I’m, I’m shocked.

I mean, I’ve had an investor that was able to pick up a property off market for 35,000. And good for them. It was the perk of being there at the right time. 

Chris McAllister: But you’re a trusted member of their team. Right? Exactly. You’re, you’re there for them for their entire business, their entire for portfolio, anything that comes up, you’re not just there for the next transaction.

And 

Speaker 4: Exactly. 

Chris McAllister: And I do think it, it, honestly, I don’t know a lot of agents that do good long-term re repeat work with investors that have a transaction mindset. If you don’t have that relationship mindset, if you’re not there to provide value to their overall business, not just that. Next transaction then?

Yeah. I don’t, I don’t know that those folks are gonna be loyal. Doesn’t mean that they’re bad people. It just means that if you’re pro, but it does mean that if you’re providing value as a professional to these folks and you’re there for them, for as long as you’re both, up and running and working that, uh, they’re gonna, they’re gonna be loyal and, and reciprocally, you’re gonna be loyal to them.

Priscilla McNamee: Yeah. And be an honest, be an honest about value, like I said, whether it’s something they wanna hear or not, 

Chris McAllister: Absolutely. And a lot of times that’s a hard conversation to have and you know, people you know wanna push back. You’ve gotta, you’ve gotta stand your ground. You’ve gotta have the courage of your convictions.

It doesn’t mean you can’t go out and get a second opinion. Doesn’t mean you can’t be open to this and that. But the fact is, especially with somebody who’s buying from outta state, you’ve got to be honest with ’em. I can’t tell you how many you know, folks I’ve talked to recently that bought, you know, houses in Columbus during COVID and uh.

You know, they never made the money they thought they were gonna make, and now they’re interested in getting out from under them. And, and the market has softened up, you know? And as a real estate professional, you never wanna be in that position, right? I guarantee you the people who sold them those houses are not getting repeat business.

So put it that way. 

Laci LeBlanc: I think that’s a great point is that, you know, underlying, I think one of the fears that agents probably feel is that it’s more than just a transaction. I think that these investors tie their real estate agents to the outcomes, right? If they purchase the property and the transaction goes really, really well, that’s one thing.

But how does the management go? How is the profitability of that property long term, right? When it’s a year later, or two years later, or five years later, how did that property end up performing? So, um, you know, being tied to the outcome of that investment versus just the transaction itself, I think is a really big deal.

Um, and can probably be pretty intimidating when you think about it. 

Chris McAllister: It is funny you’re talking about that because, you know, we, we’ve been working on actually both of, you know, a referral program for. Agents out there to, you know, if they have investors that they’re working with that possibly need property management or a second opinion that they can come and, and talk to our property management team.

But I do think it’s important that any agent who wants to work with investors for the long term, if they’re not already doing property management or have a property management division in their office, that they should. They should make friends, they should, you know, create a partnership with a part, uh, a property management firm, no differently than they would have a partnership with a lender or with a title company.

Because at the end of the day, you want a situation that’s gonna make both of you, everybody wants to look good, right? So you may look at a property and, you know, you may feel pretty good about it. As an agent, it probably makes sense, or sometimes it makes sense for you to, you know, call your, your friendly neighborhood, uh, property management partner and have them take a look at it and get a detailed, you know, scope of work for what it’s gonna cost to, fix it up the first time, what they think it’ll rep for and things like that.

So it, it still goes back to that, that partnership and, you know, just, just like I said, we’re putting together a training guide for how to work with. Real estate investors and you know, we’re doing it for a couple of reasons. One, yes, it’s great to elevate the industry, so to speak.

Right? It’s great to be able to have more agents informed about working with investors because ultimately it makes our life and property management that much easier. But the other thing is, I think if we had some agents that we could help. Get more comfortable working with investors, then we’re probably more likely to get referrals from those agents for property management, right?

So, a little bit of selfish motive there, but for a lot of different reasons. I’m excited about this, uh, training package that we’re putting together about how to work with residential real estate investors. So I’m sure we’ll have that available for everybody once this, uh, podcast gets published. 

Priscilla McNamee: I think something else that’s really critical is helping, and especially first time investors, helping them get started with financing.

That’s something that they are very, very afraid of, and just giving them multiple options for that. That’s very, very important. And a lot of agents are not familiar. They don’t know where to begin. 

Chris McAllister: Yeah, I mean, you, you know, I, and another, I, another shameless plug, Laci. So forget. 

Laci LeBlanc: I love it. I love every second of it.

Keep going. 

Chris McAllister: You know, we’ve got a partnership or a relationship. It’s not a partnership, but a relationship with Lending One. And they do they exclusively do lending for real estate investors. Now they’re looking for real estate investors that have, you know, a little bit of experience in one of the, criteria is, is that they have to be purchasing within an LLC. So they already have to have an LLC set up and so forth. But these folks work on, and where’s my Handy neighborhood Google machine here. So this, they are A-D-S-C-R lender, and I can never remember what DSCR stands for. So here we go. This is just what we preached, right?

D-S-C-R-D-S-C-R lender.

Laci LeBlanc: Is that the sound that Google makes when it’s thinking? 

Chris McAllister: Yeah, and it also is when I’m an old guy who has trouble making his thumbs work debt service coverage ratio. That’s what D-S-R-D-S-C-R reads. So what it is is A-A-D-S-C-R lender doesn’t really care what the house next door sold for. When they value that property, they’re gonna value that property based on the rents that collect that’s collected and how much the taxes and insurance and so forth are.

So lending one fantastic resource. I think, um, you know, my experience you know, I’ve, I’ve, I have nothing to. It’s no reason to hide it. I work with, uh, park National Bank. Um, they’re a regional bank that works with a lot of investors. So, you know, those are two great resources and we’re happy to get you in touch with real people if you wanna reach out.

But, you know, a regional bank is going to be able to do a, a lot of great things for you, as is A-D-S-C-R lender. And it doesn’t mean that, you know, if you’re buying your first rental property, that you know your traditional. Owner, occupant, lender can’t help you. But I still think it’s worthwhile, especially if you have visions of, you know, doing this for the long term, that you want to go ahead and establish those relationships early on.

Priscilla McNamee: Yep, absolutely. 

Laci LeBlanc: Well, because everybody’s not a big name real estate investor. Right. Everybody’s, a lot of these investors are small business owners or, you know, accidental landlords who are moving up from their house and they saw how profitable that first property was, and maybe they want to buy another one.

Uh, so it’s a lot of the people that you work with day to day selling them their first house or selling them their next house or selling their, their forever house, right? So, um, their forever roof. Uh, but so it, you can’t just assume that they all know a lot more than you do, which Priscilla, you’ve made that point a couple of times and I think that’s really great.

Uh, but you know, anybody on your current client roster could be a potential investor. So having these relationships and sharing that with these folks, um, I think is really powerful. 

Chris McAllister: Yeah, I don’t wanna leave Bill Riley out. I know Bill Riley’s a great lender. Priscilla, you worked with him. He’s great. 

Laci LeBlanc: He’s 

Chris McAllister: fantastic.

And, and, and he can do some rental property work also, and he does a, a hell of a job. But there does come a point in everybody’s investment career where they need a little bit more flexibility and sometimes, you know, somebody who lends their own money as opposed to, you know, government backed Fannie Mae, Freddie Mac money.

So. There is a place for, you know, quote the retail lender in all this as you’re getting started. But, uh, there’s other, other options out there that can help you grow. 

Laci LeBlanc: So I have another question. Um, you know, we’ve talked about kind of. This being the niche that makes you rich. And we’ve also talked about how constantly this industry is changing.

What does that look like for agents who work with investors? What does the future look like? Is this, obviously we think this is kind of a smart investment in your future. We probably wouldn’t be doing a podcast and creating a training about it if we didn’t think so. But you know, what are your thoughts about that, Chris?

Why is this, a good step for young agents or agents who want to, futureproof themselves, why is this a good step for them? 

Chris McAllister: There was a Jeff Bezos story that from a few years ago where I think he told an interviewer that he didn’t really. Care about the things that were going to change over the next 25 years.

All he cared about was what was going to stay the same over the next 25 years. And you know, one thing that we know for sure, everybody’s gonna need a roof over their heads, but the other thing that we’re seeing in the trend is, is that there’s a greater percentage of people. That are renting properties to live in for the long term versus buying properties to live in for the long term.

And that trend is not gonna change. You know, it goes back and forth, you know, in some markets, 50%, but never gets above, you know, 60, 65. So there’s always gonna be people who are looking to. Rent properties and, and either not want to buy a property or not be in a position to buy a property. Right. So, never ever going to change.

So that means there’s always gonna be investors, and when investors make money, they always wanna buy more properties. That’s never gonna change. Right. You know, and I, I, basic math doesn’t change. You know, there’s, there’s just so much about this that. It’s, it’s not there. There’s nothing about working with investors.

I, I shouldn’t say nothing, but there’s very little about working with investors that AI is gonna eliminate us, right? AI is gonna make us incredibly powerful and smart and so forth, right? All we have to do is ask chat, GPT, what’s the ROI of this property? If blah, blah, blah, blah, blah, blah, blah. And you get an an answer instantly.

But people are always gonna need a roof over their heads. People are always gonna rent, there’s always gonna be investors. You know, if you’re in property management, you, as far as I know, AI can, Zillow still can’t unclog a toilet right there. There’s still, there’s still things that have to happen, uh, to keep a roof over people’s heads that are just not going to change.

People still respect competency. They still respect loyalty. You know, they respect people who show up and do what they say they’re going to do, and, and I think those are the. Biggest reasons I, you know, I, I think anybody can think of as to why, you know, if, if you’re a real estate professional, I mean, who wouldn’t wanna cultivate those kinds of relationships?

Laci LeBlanc: I. So that’s, we have a whole nother podcast episode about the unfair advantage that real estate agents should be taking control of. And that is, you know, being investors themselves, why real estate agents should be investors. Right. But I was just thinking about the unique opportunities. Specifically for real estate agents that work with ROOST, uh, and kind of our relationship with investors.

Can you talk a little bit about the unfair advantage that ROOST agents have specifically with investors? 

Chris McAllister: Well, I mean, we do work with a lot of investors because of the property management division. There’s no question about that. And, from time to time, and again, it’s, it depends on the season that we’re in, right?

If we’re in a buying season or a selling season, you know, we have, there’s a lot of buying and seller op selling opportunity that happens within, you know, our owner group. No question about it. But the other thing is, and you know, I, I. If you’re, if you’re going to choose to work with investors and to have, Gretchen and the property management team, they’re available to answer questions, to talk to, you know, your client, to, you know, let ’em know what happens after the sale and so forth.

I do feel like that that’s a huge benefit to our folks to, to have that in-house and be able to, you know, have a joint conversation or a joint zoom or, I, I do think that’s a plus. I. Um, but a, again, I have another 

Laci LeBlanc: property, property right down the road that we’ve managed for x number of years that you have the data for.

Um. I do think that, that can make a difference in, in the transaction, in the successful, you know, how successful you are as an agent just having that information available to you. Right. We have a 

Chris McAllister: lot of institutional wisdom. You know, we started the doing property management, I think it was, what was it?

I don’t even remember. It’s when Gretchen got her license. So it’s probably 2010 or so, you know, and, and you know, we’ve got people on the property management team that have been with us for God, 10, 12 years, so we have a lot of institutional, we’ve got owners that have been with us the entire time that we’ve done property management.

So I do think that’s a benefit that, uh, trickles down to every single agent. But it’s definitely a, a benefit for agents who want to cultivate. A business working with, in, with, uh, investors for sure. 

Priscilla McNamee: I would say as an agent working for ROOST, it’s a major benefit because when I have investors, especially out of state, I can connect them with Tina or with Gretchen immediately, and they can give them a full rundown of property management, and it just gives them such a feel.

It gives them so much comfort to know that it’s basically like a one stop shop that can work with me. I can help them find. You know, their investment property, and then I can immediately turn them over to Gretchen, um, and Tina, and they’re gonna take care of them on getting everything set up, you know, managing that property.

And they’re out of state, so, I mean, they just, they have such a, a sense of relief, which is so nice because I’m not having to send them off to another building per se. 

Chris McAllister: The other thing I think is a help too, and this is with the retail business as well. You know, we’ve got, gosh, what are we up to now? I think we have seven W2 maintenance team members on staff that are doing unit turns.

They’re doing maintenance and occupied units, but I’ve got a listing coming up near Enon and they just needed to have some, uh. They had some exterior trim that was wood trim. Some of it was rotted, needed to be replaced and and painted. And you know, we were able to send our guys over there, knock it out in four hours, far better price than they were ever to get by, having to call a TR contractor to come in.

But there’s just a lot of different synergies that I think sometimes we take for granted that. That are there for agents. If you have a, if you have something that needs to be done with a, a listing to get it sold or, you know, it needs to be done quick and, and at a fair price, you know, we, we’ve got that.

You know, God forbid, you know, we have an agent with a listing and they can’t sell it. For whatever. I don’t mean the agent can’t sell it, but the property doesn’t sell for whatever reason. At least there’s a alternative. Well, you could rent it, you know, let’s at least explore that as an option so they can talk to somebody on the team to see what it would rent for, what that would cost, and so forth.

So yeah, I do think there are some synergies there. And, and again, you know, in a time when there’s still some consternation amongst us realtors about, you know, the. NAR, uh, lawsuit and the commissions and so forth. I do feel like, and, and, and it is that there’s stability in working with investors and, you know, even if it becomes 10, 15, 30% of your overall business, it’s gonna create, a, a steady income even when the rest of the market is a little off, if that makes sense.

Laci LeBlanc: Yeah, I think it goes back to a conversation we have a lot on this podcast, which is finding, you know, the right fit. Uh, so finding the right fit brokerage in, in this case, you know, ROOST is probably not alone. We’re very proud of ROOST. We’re very proud of the synergy that we have. But there are other brokerages out there if you’re listening out of state or if you’re listening in another area.

That do this work as well. Uh, but finding the broker that fits your goals. So if working with investors seems like a good goal for you, if it’s something you’ve thought about in the past, if it’s something you’re already doing, finding a brokerage that supports that in whatever way I think is huge for an agent.

And in making sure that whatever your goal is, even if it’s not this, that that synergy is there, I think is the really great point that you made here. Um, and what we like, we don’t want agents to come to ROOST that, that are not gonna fit in, that we’re not gonna be able to support with what we offer.

Um, so if you’re an agent and you’re looking for that, then that’s. That’s what you have to ask. So maybe I’ll, maybe I’ll repost that masterclass we did so long ago about finding a right fit broker. But I wanna end with, we’re kind of on out of time here, so I wanna end with one more question. If I could do one thing as an agent to move forward with working with investors, what is that?

What is that next right step to take? 

Chris McAllister: I would say that you want to download the new training, self-guided training program that we have called How to Work with Residential Property Real Estate Investors, but the Above and Beyond. Shame plug 

Laci LeBlanc: number two, I love it, 

Chris McAllister: but above and beyond that I, you know, I.

Honestly, if anybody wants to, you know, talk to me about working with investors or you know, how we do it at our company, you, you can just go to the website, my phone number’s there, email’s there, and so forth. I think, you know, I don’t wanna speak for Priscilla, but Priscilla, my guess is you’ll talk to just about anybody as, as, as much as I will.

So, you know, if we can be of help to anybody out there, we’re happy to, to be of help. And if we can add value, we’re, we’re thrilled to do it. 

Priscilla McNamee: What I would say, pick up the phone and call five people that you think are interested in possibly investing who, who have, you know, considered it, they’ve talked about it, maybe they’re thinking about dabbling in it.

Just, you know, pick up the phone, invite them to lunch and talk about it. 

Chris McAllister: Yeah. Yeah. Get started. But if you have any questions about how to service them along the way, call us and ask questions. You know, we’ll learn something too. All right. Does that wrap it up, ladies? I guess, uh, I sort of rambled on about this.

That was a quick hour. 

Laci LeBlanc: It time, time flies when you’re having fun. I hear.

Chris McAllister: All right, Priscilla, thank you for doing this with us today. So thanks for listening to this episode of the Connect Practice Track and Grow podcast. If you’re ready to stop being afraid of investors and start building confidence, make sure you download our free self-guided training.

How to work with residential real estate investors. And until next time, remember to connect, practice, track, and Grow. 

Laci LeBlanc: We’ll see you next time. Bye guys.