Although I may be considered to be somewhat of a maverick as far as the traditional real estate industry and business goes, even some corners of this admittedly lucrative industry are off limits to me as well. For the most part any outsider who has a remote idea of what the industry is all about might ask just why it is we don’t quite branch out properly into peripheral industries like developing and flipping properties ourselves, or something like becoming a landlord.
I mean I can just imagine how enticing the prospect of buying a property is and then perhaps renting it out so that you have a consistent stream of cash flow, versus trying to sell as many properties as possible as part of your desire to earn commission as an estate agent. The truth is we’re bound by some industry-regulation ethics which pretty much prevent us from gaining what would be an unfair advantage.
As an estate agent for example, you definitely know which areas are best suited for which type of property investment, from the quiet neighbourhoods which are popular amongst retirees who want to enjoy a simpler, calmer life to those properties forming part of a hot market for something like student rentals. As part of the ethics code we’re bound by, we are indeed allowed to invest in the real estate market in this way, but our first duty is to the market at large and the clients we’re representing. If for example I wanted to buy a property for myself and deploy it as a personal investment, the only way I can do that is if there are no “organic” buyers for a considerable period of time.
Besides, advising buyers and sellers from the point of view of what they can do with the properties they’re considering is just part of what makes our services as real estate agents that much more valuable. I’d rather advise prospective buyers of the investment value of the property I have listed for them to possibly buy and earn my commission (and the great referral to go with it) instead of me being the one to buy the property and try to turn it into a money-spinner.
So if for some reason you’re wondering why real estate agents don’t get into property development as much as you might have expected and if you’re wondering why we so readily give away insightful info about how you can do it, worry not – we’re in this industry to extract value out of it from different places.
That said there is so much more to property development than buying a property, fixing it up and then selling it on or renting it out. There is so much more to contend with, such as how older houses may have asbestos roofs to renovate which would require the expertise of the likes of Master Environmental as waste removal specialists who have the capacity to handle such specialised jobs.
It’s a lot of fun once you get the hang of it though, not to mention just how lucrative it can be.
