For most experienced residential real estate agents, it’s no longer same-old, same-old when it comes to getting clients into homes. In a market shifting due to affordability issues, along with hopeful first-timers viewing a property they would occupy, you might also be facing stern-faced investors with iPads. Or you might not see them at all since they often acquire the information they need online, having no plan to spend even one night in the home if their bid is accepted.
Homes in America have, to varying degrees, become commodities, with more and more individuals and institutional investors buying them purely to make a profit, long- or short-term. Who will actually live there is inconsequential.
Of course, nowadays, you could easily be representing an investor. How do you go about providing them with answers to questions likely not posed by a buyer planning to occupy? After all, the goal is to get to a successful closing regardless of the client’s motives. RISMedia asked real estate pros 10 questions about their approach when it came to investors.
How often do you encounter investors?
Pam Rosser Thistle (PRS), with Berkshire Hathaway HomeServices Fox & Roach, REALTORS® in Philadelphia: It is just starting to creep in again in my Philadelphia market. Not noticeably, but I do see it.
Danielle Andrews (DA), with Realty ONE Group Next Generation, in Tallahassee, Florida: I work with a good number of investment buyers, especially living in a college town. Between student-housing demand, short-term rentals and long-term-hold opportunities, our market attracts a steady stream of investors looking to capitalize on consistent rental income and strong appreciation potential. It’s common to see both local and out-of-area buyers adding Tallahassee properties to their portfolios.
Alyssa Soto (AS), of Powered by DMT, in New York and Miami: Roughly 40% – 50% of inquiries are from buyers with investment intent, people who may not occupy the residence full-time but want exposure to South Florida’s appreciating coastal market.
Justin Alexander (JA), with Hilton Hilton, in Beverly Hills, California: I’d say about 10% – 20% of our buyers each year are looking for income-steady investment properties.
Jules Garcia (JG), with New York City’s Coldwell Banker Warburg: A significant portion of our business focuses on advising investor clients on asset acquisition and income optimization. We identify properties with strong rental upside and guide these clients through the purchase process with a focus on long-term yield potential. Immediately following closing, we oversee the transition to the rental of the home. During this phase, we strategically prepare the home for an incoming tenant, build out an appropriate rental pricing model and market the property to minimize the vacancy period, while marketing to tenants who are willing to pay premium rental rates. Our goal is to maximize the return on investment through both efficient leasing timelines and above-market rental results.
What are the differences between someone planning to buy and live in the space vs. someone buying for an investment?
PRT: Someone who buys for investment expects to make a return on the property. Often, they never live there. Little or no emotional attachment. It is a financial tool. A buyer who plans to live in a property makes it their own. Makes memories. While they want to be smart purchasing, there is a love affair with the home and a sense of excitement. No spreadsheets.
DA: The biggest difference is mindset. A primary homebuyer is driven by emotion and lifestyle; they’re looking for the home that feels right. An investor is driven by math and strategy. They focus on cash flow, return on investment and long-term gain. Homebuyers think about family dinners; investors think about future tenants and maintenance costs.
AS: End-users fall in love with the design, light and lifestyle. Investors, on the other hand, analyze price per square foot, projected rental yields and long-term liquidity.
JA: Someone planning to live there may be more emotional about the purchase at first, resulting in spending more than necessary, whereas finite investment buyers have firm formulas hoping to spend as little as possible on acquisition costs.
JG: Someone who’s planning to be an owner/occupant is typically targeting a property that hits both the head and the heart, whether they’re conscious of it or not. They typically focus on home size, neighborhood, commuting time, school district and whether it just feels right. Essentially, the home needs to satisfy a sense of arrival, irrespective of property size. That said, this is where a good real estate advisor helps to find the happy intersection between all of those factors and solid intrinsic value for the property. A smart investor typically focuses on the key financial metrics such as Cap Rate (capitalization rate), NOI (net operating income/price), tax implications, appreciation and price if they need to liquidate quickly.
Adjina Dekidjiev (AD), with New York City’s Coldwell Banker Warburg: Buyers who are looking to live in the apartment have different priorities; they usually look to purchase in a specific neighborhood, for their lifestyle, to be near their child’s school, etc. Investors, on the other hand, are looking for upside potential. They carefully choose the property’s location and look for the highest income/appreciation potential.
What do you discuss with investors?
PRT: I discuss rental rules, certificates needed and tell them to confer with their accountant. And what it’s like to be a landlord, especially if they have moved out of the area.
DA: We talk a lot about numbers, such as rental income potential, operating expenses, after-repair value and exit strategies. I also make sure they understand zoning, insurance and property management expectations. The goal is to align their investment goals with the realities of the market so they’re positioned for success, not surprises.
JA: How long do they plan to hold the property, will they ever use the property for personal use or just 100% rental, do they prefer a standalone home or a managed building or development?
ARQ: The overarching topics we discuss with an investor are their investment objectives and strategy, the market analysis of the property (and neighborhood), building due diligence, rental income and expense projections, financing structure (at which point we will also loop in their mortgage banker), if necessary, potential renovation value-add to the rental income and future exit strategy for the investment. We will also consult a real estate attorney for legal and regulatory considerations regarding the purchase of the home and building due diligence.
What are the main questions investors ask?
PRT: How much rent they can expect to collect each month.
DA: They often ask, “What’s the rent potential?” “How quickly could I resell if needed?” and “What are the neighborhood trends?” When we discuss trends, I’m referring to objective market data like average days on market, price appreciation and rental occupancy rates, not neighborhood demographics. My role is to provide insight based on factual, publicly available market performance, keeping every conversation fully compliant and data-driven.
JG: Novice investors almost always focus on the Cap Rate and carrying costs. We also have a deeper conversation about items like FAR, Floor to Area Ratio, which helps to determine further build-out for development opportunities.
AD: What is the highest rent I can get for the property? What are neighborhood comparables? Expenses? Neighborhood desirability? What would the long-term value be?
Do you like working with investors?
PRT: I am committed to my clients through the ups and downs of homeownership and the selling process. If renting is what they must do, I usually bring in a rental specialist. Any misstep can cause financial and even eviction issues.
DA: I do. Investors tend to be decisive, informed and strategic. They appreciate efficiency and data, which makes for a very professional working relationship. It challenges me to think creatively and stay sharp on market analytics, which I love.
AS: I genuinely enjoy it. They’re data-driven and decisive. Once the numbers make sense, they move quickly.
JA: Of course. Investment properties, if secured properly, provide families with a strong path to building personal wealth.
JG: Of course! My team and I love working with investor clients who are true partners. It helps us to stay on our toes because there’s even more data to consider. Working with our investors also elevates our advisor acumen for our residential end-user clients because it gives us a detailed look at the mindset of developers and landlords. It definitely gives us an edge over agents that are not as experienced with investor client relationships.
Ashley Reidy Quinn (ARQ), with New York City’s Coldwell Banker Warburg: It’s a very comprehensive exercise to analyze these investment opportunities, and seeing our research translate into real results for our clients makes it all worthwhile. Plus, this success often leads to our clients partnering with us to further expand and diversify their real estate portfolios with additional investment and/or personal opportunities.
What potential dangers, if any, do you tell them about?
PRT: Not reporting income and the risk of tenants not leaving. Also, damage to the property, which can lessen the value of their home.
DA: I remind investors to always factor in the worst-case scenario. A flip might take longer to sell than planned. A rental might lease for less than projected or sit vacant longer than expected. The best investors plan for conservative returns and unexpected expenses. Hope is not a strategy, but preparation is.
AS: I caution them against assuming short-term rental flexibility without reviewing condo documents, and remind them that even in strong markets, timing liquidity is key, especially in pre-construction.
JA: Nightmare tenants. Screening all rental applicants at the highest level should be handled by their broker or property manager.
JG: The biggest ones that folks underappreciate are how important doing their research is and the value of hiring the right partners, whether it’s the real estate advisor, property inspector, surveyor, attorney, contractor, etc. Investors should definitely start with the right advisor and determine if that advisor’s process is detailed/robust and aligns with their working style. This ensures that there is someone there to help quarterback the whole process.
AD: In New York, I tell them about the specific landlord-tenant laws, factors that might affect rents and renovation costs.
ARQ: The overarching topics we discuss are initial purchase price cost and carrying expenses, tenant and rent regulations, aging infrastructure for both the apartment and building, potential neighborhood changes (new neighboring buildings, potential view disruption, commercial impact on the neighborhood, etc.), market volatility and limited liquidity and opportunity cost.
Have investors impaired your business in any way?
PRT: No, investors are always a part of the market.
DA: No, investors haven’t hurt my business at all. If anything, they’ve strengthened it. Working with investors gives me insight into how those offers are structured, which helps me guide traditional homebuyers when competing against investor offers. It’s an advantage to understand both sides of the equation.
AS: If anything, investors have broadened our buyer base. The only challenge is managing expectations when rental demand softens seasonally.
JA: No way. Not possible.
JG: Investors with the wrong mindset have hurt most agents’ business. If it’s an investor that doesn’t do their due diligence and only sees dollar signs without appreciating their personal accountability, they may venture into projects that ultimately distort neighborhood pricing, quality of product, or both.
Are investors cutthroat when it comes to negotiating price?
PRT: Investors are about the numbers. But often, cash with no contingencies and a fast closing works. With time being money, their offers may be worth taking.
DA: Yes, investors negotiate without emotion. They have clear financial thresholds and walk away if the numbers don’t make sense. It’s not personal, it’s business. That approach keeps me sharp and focused on data instead of drama.
AS: Investors tend to negotiate harder on gross price, but will pay premiums for strong fundamentals and brand credibility.
JA: Personally, it’s split 50/50 I would say. Some just want to get the deal done and ride strong out of the gate, while others push to get the bargain deal.
AD: It depends on the investor. They know what numbers work for them, and that’s the bottom line for many.
As an agent working with those who will occupy, how do investor clients differ?
PRT: I do not seek investors as buyer clients. But they sometimes make offers on my listings.
DA: With investors, I focus on value, not volume. I bring them well-researched deals, sometimes even off-market opportunities that align with their strategy. Building trust is everything, and that comes from transparency and consistently delivering results. Once they see you understand both investment language and local inventory, they keep coming back.
JA: Ask lots of questions, provide options, analyze their potential returns and support their risk taking if it makes financial sense.
JG: Accomplishing our clients’ goals starts with really understanding the data and the investor’s situation. We evaluate whether the investor is reasonable and is committed to a mutual win (a good deal for all parties). We compare this with investors who set off red flags, informing our buyers so we can proceed with the right level of conviction in the property.
Do homeowners prefer selling to people who will live in the house?
PRT: Usually sellers want someone who will live in their house. But I find they are more concerned about getting the most money.
DA: Many sellers have an emotional attachment to their home and like the idea of it being passed on to someone who will truly live there and make memories. However, when it comes down to decision time, most sellers prioritize the strongest and cleanest offer. Sentiment does matter, but when the ultimate goal is to sell, who the buyer is becomes less important than their ability to close smoothly and on time.
JA: If it’s sentimental, maybe. But most sellers at the end of the day want whoever will pay the highest price and best terms.
AD: Yes. I recently sold an apartment to a renter who was a long-term renter. They loved the building and the staff, and it was a relatively quick process.
ARQ: From my experience, there is no preference. Sellers are mainly focused on achieving the highest sale price in the shortest amount of time, and cash is preferred.
