Updated: Aug 8
Thomas Anderson, a 50 year old real estate agent, woke up one morning with a sudden sense of dread. For the past 20 years, he had been one of the top performing Realtors at his firm, having hosted real estate conferences and even starting his own real estate brokerage.
But he realized that he had forgotten one important thing: planning for retirement.
Like most professionals his age, he had managed to squirrel away a nice investment portfolio and was making a good income. However, did he really have enough money to live the life he had always dreamed about?
Fact, is most real estate professionals aren't giving their retirement planning the attention that it really needs.
Here are some tips to help you turn things around to make sure you are prepared to retire.
Use Your Real Estate Expertise for Your Own Benefit
As a real estate agent, you know how to find opportunities in real estate better than anybody else. However, if you were to poll 100 Realtors, maybe only 5 percent of them actually have a real estate investment portfolio of their own.
You have access to MLS data that isn't readily available to the public and top vendors in various industries. You also know how to negotiate, add value to a home, and market properties for rent or sale.
You've done it for your clients. Now it's time to put all of this knowledge to use for yourself.
Start Thinking Like an Investor
For real estate agents, the first key to building a solid real estate investment portfolio for themselves is to forget about finding 'dream homes.' Focusing on the idea of selling a dream home makes agents miss out on perfectly good investment opportunities.
For example, if a foreclosure property is worth $200,000 and you purchase it for $150,000, you have a chance to make mistakes and still come out on top. Although the property isn't a dream home, it can still earn you a profit.
Start on the lower end of the market finding deals until you get used to the idea of being an investor.
Know Your Numbers and Criteria
If you want to build a profitable real estate portfolio, there are two main things that you need to pay attention to: the numbers and your criteria for the type of property that you want to invest in.
Make sure that the math also factors in property management, repairs, vacancy time, and other costs. By doing this, you can increase the chances that your portfolio is always profitable and positioned for growth.
After you establish a formula that you think will work for you, stick with it. That is how you minimize your risk as an investor.
Be Ready to Act Fast on Opportunities
Always have your documents and pre-approval ready so that you can act fast as soon an opportunity pops up on your radar. This is a no-brainer for agents since you likely already have a relationship with at least one lender.
As an agent, you know what the market wants and how to maximize the value of a property to sell in a hot market. Being a smart real estate agent that can act fast is the fastest way to build your real estate portfolio.
With so much going on in your business, you might be tempted to place your investing activities on the backburner in favor of taking care of the needs of your clients.
However, the trick is that you have to stay committed. After you take the initial leap, you need to make good decisions and regularly act on opportunities as they arise.
As with any investment, there are always exceptions to the rule. However, if you get the formula right and stick with your plan, you'll be on your way to finally having the retirement income you need.