Why Every Real Estate Agent Should Own Investment Property

You may be the most successful real estate agent, but you won’t reach your highest potential and net value until you invest in your own properties. Don’t miss out on what could be your most profitable year, and learn why real estate is a solid investment.

Knowledge Is Power

Your greatest tool in real estate is understanding the local housing market. As a real estate agent, you’re already in the know about all of the real estate trends in your area. This is a great advantage to have against other investors, simply because you have a head start on the research process that goes into finding the right property to invest in. 

You know what property type and amenities are the most valuable for renters. So now when investing in property, you can quickly make the wisest decision and profile which property will yield the greatest reward — we’re talking profits. Your competition won’t be able to keep up your edge and negotiation skills.

Low Risk in a Familiar Market

Real estate is a hard asset with intrinsic value. In simpler terms, you’re investing in an essential asset since everyone needs the property for a home or business. Prices can fluctuate in the real estate market but there’s always going to be some worth in this investment. This is why it’s a great low-risk option that you can bet on for the future.

You’re at an even lower risk for loss on your investment as a real estate agent. Any fluctuation is already on your radar, and you’re spending your days discussing the buying and selling process.You may also already know that investment property equals capital appreciation and equity growth.

Easy Financing With Valuable Connections

Working with clients from around the world has certainly given me an edge in property investment. With hands in investment property and work as a licensed broker, I’ve developed numerous connections that I realized could be used as leverage. 

Use your real estate network to gain the following:

  • Financing
  • Access to properties (even those off-market ones)
  • Assistance with legal matters

Financing specifically can be a pain when you’re a first-time investor in real estate. Your average person doesn’t know the ins and outs of private money lenders, conventional mortgages, FHA loans, and other concepts that happen to be your expertise. Through your network, you can also take advantage of financiers and lenders who most likely trust you over other investors. 

Your existing network also educates you on investing in markets outside of your own area. Investing in real estate in popular cities can be a great use of your own knowledge, your connections, and it can ultimately lead to consistent profits. Those in your network can advise on strategy and goals along with what type of residential or commercial real estate is your best bet.

Agents Need Not Apply

Your standard real estate investor is almost always going to seek out a good real estate agent to assist in buying a property. But guess what, you don’t need one! Your own experience is all that’s needed to close a deal, so you’re saving a ton of money without those fees and commissions. 

Those commissions and broker fee savings lead to a better offer price. If I just saved $50,000 in commissions, I‘ve easily increased my return on investment.

Tax Savings

Your return on investment is already reaching great heights. In addition to having cost savings as your own broker, you can also reap some significant tax rewards as well. Real Estate Agents are not subject to Passive Loss rules. Losses are the norm for property investors since they can deduct something called depreciation, a non-cash expense that is used only for tax purposes. This is an additional expense to the typical cash expenses of a real estate investor such as property taxes, mortgage interest, broker commission, and insurance.

Passive Loss Rules limit the amount of losses an investor can deduct from income. Since you are in the business of real estate and meet the criteria set by the IRS, the passive loss limits may not apply. This effectively allows you to offset your regular income with a non-cash expense of depreciation. This is a gift! It allows real estate agents to minimize their taxes in ways others just can’t do. 

Trust Your Instincts

Why not take your knowledge to the next level? Real estate agents have a leg up as property investors, and you don’t have to limit your profits to your day job. You can save hundreds of thousands of dollars a year if you turn your expertise into investment. 

Being a real estate agent is worth the time and investment. You can see that there are numerous benefits to take advantage of as well as an enduring value. We luckily have many forms of income in the real estate business, and shouldn’t miss out on the avenue that can generate the most income and the least amount of taxes!