Niman @TReXGlobal.com

Tom Kelly wrote a really nice article in yesterday's Inman News about how converting a home into rental is getting to be more difficult.

Here's a good question: Who can afford to pay cash for an additional home without first selling their primary residence?

Take a look at what he wrote:

"Surprisingly, more than four out of 10 investment buyers and more than three in 10 vacation-home buyers paid cash for their properties, with large percentages indicating that portfolio diversification was a factor in their purchase decision, according to recent study by the National Association of Realtors."

All cash for real estate, now who could do that?

Investors!

You may have noticed a large number of cash deals for homes under $100,000 between September and February – these were probably investors who weren't able to finance the properties because of Fannie Mae's limits, but couldn’t afford to pass up the great deals. Sales for those months probably would have been higher if the limits for investors weren't so stringent.

What kind of marketing tools are you using to use to grow your business with them?

The recent changes in mortgage rules are certainly helping investors get back in to the market. Fannie Mae had previously limited investors by allowing them to finance only up to four properties, regardless of whether they had money for a down payment, and perfect credit. Ever since March, the limit was increased from 4 to 10.

An article in FloridaToday describes how this has changed the real estate climate. Scott Bray, vice president of residential lending for AmeriBest Mortgage in Satellite Beach, said in the article that before the limit was raised, he would take one or two calls a week from investors who wanted to refinance a property or buy a new rental house. Ever since the limit had been imposed, if an investor owned more than four properties, they couldn't add a new mortgage or refinance a current one.

Dick and Ginny Pugh had begun their real estate investing career 8 years ago and Dick had worked 33 years as an airline pilot. The couple never had a problem getting a loan until December 2008 when they found a home that they liked but could not get financing. Luckily, they were able to take out a HELOC and buy the rental with cash.

You may have noticed a large number of cash deals for homes under $100,000 between September and February – these were probably investors who weren't able to finance the properties, but couldn’t afford to pass up the great deals. Sales for those months probably would have been higher if the four-property limit hadn't been in effect – and not allowing investors to chomp through the backlog of foreclosures has been hurting our markets.

The current markets are an investors’ playground, and serving to the needs of this segment is the key to improving the housing market. What kind of marketing tools are you using to help grow your business with investors?

Many of you have heard about how the IRS has been targeting Real Estate Agents, and challenging the status of a "real estate professional" for an Agent.

To give you a brief background without getting into the details - a "Real Estate Professional" is someone who "materially participates" in their real estate activity. As a result, they are able to deduct real estate losses from other income that is not related to real estate.

The IRS had been challenging the "real estate professional" status for agents - stating that Brokers qualify, but Agents do not. And they were winning...

The great news is that a Real Estate Agent just won in tax court! Read the case for yourself!

The IRS tried to argue that the taxpayer needs to be a “Broker” not a just an “Agent” to meet the 750 hour per year material participation test. The Tax Court said: “The Court concludes that Congress is presumed to have defined the term “brokerage” in its common or ordinary meaning. The Court also stated that for purposes of section 469, the “business” of a real estate broker includes, but is not limited to: (1) Selling, exchanging, purchasing, renting, or leasing real property” and therefore, an “agent” is the same as a “broker” for purposes of this test.”

Yippy!

Congratulations, you are all real estate professionals again! Are you using our FREE marketing tools to grow your business?

Interesting article today from Wall Street Journal that highlights some of the latest investment trends. Real-estate agents in many markets say investor buying is high, and one way to tell is by looking at how many home buyers are paying all cash. Though not every cash sale involves an investor, the investors often use cash because they can close quicker and get a better return. In the Phoenix area, for example, about 38% of April sales of single-family homes were all-cash deals.

Buying houses, rather than apartment buildings or other commercial property, tends to favor small investors who are agile and understand local submarkets. Much of today's buying is being done by mom-and-pop investors, who are acquiring a few houses to rent out.

In markets where prices have fallen the most, bargains are difficult to pass up for larger investors. In Phoenix, Mark Allen, (former division president at D.R. Horton, nation's largest home builder), is reselling homes he is buying at courthouse auctions with funding from an Oregon-based firm that targets foreclosures.

What I found most interesting about the article was the statement "The investors are no panacea to the nation's housing woes. When the market improves, many of them could put their houses up for sale, reinflating supply."

I think we'll have to cross that bridge when we get there. Investors are doing us a service right now. What do you think?

Check out our FREE Partner Program to learn how you can market to investors.

Real estate investors are the most active buyer In the current markets. They account for more than 1 out of every 5 real estate transactions,and 75% of their purchases are single family homes, condos, and townhouses.

What are you doing NOW to grow your business with investor clients, and what actions can real estate professionals take to make investor clients want to do business with them?

I think it's important to put yourself in an investor's shoes, and think about how you can solve their pain points. When you provide investor clients with solutions that address their needs, they see that you have their best interest in mind, and you will become the person that they choose to work with.

So without spending any money, what kind of services can you provide that an investor wants? We're holding a 25 minute webinar this upcoming Friday at 11AM PST on "How to Market to Real Estate Investors," and I think you will find it pertinent. It will cover:

1. Why are RE Investors important to me?
2. How can I be successful with them?

You will also have an opportunity to participate and ask questions. Register by clicking here!