Find fortune working with entry-level real estate investors

Today’s RealTrending features Michael Scanlon and Jake Fugeman, team leaders for Axon Group, powered by eXp Realty and based in Chicago. After investing in real estate themselves, the duo decided to start a real estate practice working with investors.

While they’ve expanded their niche to all buyers and sellers, they still work heavily with smaller investors. Here’s who they did it.

Here is a small preview of today’s interview with Mike. The transcript below has been lightly edited for length and clarity:

Tracey Velt: You both built this niche working with investors, because you were both investors yourself. Tell me a little bit about the types of investors you work with.

Jake Fugeman: Most of our investors are what we would consider entry level or mid-level. A lot of them seem to come from, and it’s not a super recent trend, but people who are folling the FIRE movement. FIRE stands for “Financial independence, retire early.”

A lot of these buyers, when they’re starting out, are looking for a consultative approach. Most of them are people looking to do something called “house hacking,” which is buying a three-unit and living in one of the units, and renting out the other two.

Tracey Velt: Michael, tell me how working with investors really differs from working with an owner-occupant, although some of them sound like they are owner-occupants as well. It’s a combination. Tell me a little bit about how it differs.

Michael Scanlon: There are some investors who don’t care what a property looks like, but we still have investors who want a product that is going to be appealing, the same as any residential buyer. But they also need the numbers to work.

They’re going to want their property to still be appealing, but we also need to look at their cash-on-cash return. We need to look at how much money they’re putting in up front, how liquid they can be. There’s a lot of math that goes into it. We’re doing pretty high-level math. Not just simple cash-on-cash, but things like internal rate of return, we’re calculating for them. Making sure that they’re understanding of what their tax benefits are by buying this property.

We’re trying to set them up as best as we can long term, and that includes a lot of aspects of maximizing their liquidity with some little 1% tricks that we like to use. Just making sure that we have their multi-year goals in mind. Saying, “Hey, listen, you’re expecting a job promotion next year or this year. Let’s go with your low down payment loan, and then next year you can really max it out.”

RealTrending features the brightest minds in real estate. Twice a month, brokerage leaders, top agents, team leaders, and industry experts share their success secrets, trends, and lessons learned navigating this ever-changing industry. Hosted by Tracey Velt and produced by Elissa Branch.

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