Tap Your Own Expertise to Build Your Portfolio

November 10, 2019

Real estate professionals are in a unique position to diversify their personal finance portfolios through the wealth-building potential of real estate, a panel of REALTORS® and property investors said Sunday during a session at the REALTORS® Conference & Expo in San Francisco. “We know our markets better than anyone,” said Maura Neill, an agent with RE/MAX Around Atlanta in Alpharetta, Ga. The same savvy that helps your clients can serve you, she said.

Bill Lublin, CEO of Century 21 Advantage Gold in Huntingdon Valley, Pa., who has accrued several hundred properties over his lifetime, says he’s proof positive that real estate investment pays off. “Retirement is an option for me at any moment because I have sufficient rental income,” he said. “I don’t have to change my lifestyle if I stop working. Well, maybe I can sleep later.”

The hardest thing about investing—other than dealing with 3 a.m. calls from tenants—is buying that first property, all three panelists agreed. But once you get past that hurdle, you’ll be able to spread your risk over a variety of holdings. They shared their investment rules of thumb:

Purchase price is important. “But you don’t have to steal it for it to be a good deal. It’s all about the numbers and appreciation,” Lublin said. “You make your profit on a property when you buy it, not when you sell.”  

Get creative to find investment properties. Kristin Smith, an agent with Dave Perry-Miller Real Estate in Dallas, said, “Follow the construction. If the city is investing in better streets, that could be a good sign. Also, go to city hall meetings and stay informed so you can react before others.”

Neill looks for properties that have been on the market for 90, 100, or 180 days, possibly because they were priced too high. She also looks at whether the property was furnished in the listing photos. “Those sellers may have had to move and are feeling the pinch,” she said. “That could be an opportunity.”

Smith gets creative with off-market listings. She’s found deals by scouring tax rolls for out-of-state owners. They may not be emotionally involved in the property, which makes for a less emotional, numbers-only transaction. So it’s good to see if they’re interested.

Opportunity Zones offer a great path to investment. You can reinvest cap gains into a Qualified Opportunity Zone to defer that gain for up to 9 years. You also can get a tax reduction on the gain, depending on how long you hold it. Opportunity Zones—distressed areas with appreciation potential—are also a great opportunity for clients who need something affordable. Consult NAR’s Opportunity Zones toolkit.

Strike partnerships with other pros. If you’re outpriced in your market, network with agents in other markets, says Smith. She has partnerships with out-of-town pros that are mutually beneficial in terms of investment, referrals, and advice. “If your market hits a snag and the other person’s is booming, you can even things out” with a partnership, Lublin says. That’s why real estate conferences are beneficial, Neill says. “You can find people who are good at investing outside your market. I know I can call these folks and get some advice.”

Keep two good advisers in your life. Have a CPA and a financial planner who understand independent contractors and real estate investing, panelists said.

Stay on top of housing policy changes. Laws at the state and federal level inform your investing strategy, panelists said. Neill monitors industry news at nar.realtor and by setting up Google alerts. “You don’t want to get to the closing table and find you can’t rent the property,” she says.

Understand your taste for risk and return. And tailor your strategy around your comfort level.