If you’re sitting on a lot of capital but don’t have time to research and invest in real estate yourself, you might benefit from working with a real estate analyst. Analysts are typically hired by investment firms to verify whether a deal is as good as they think it is. While you are certainly capable of doing what an analyst is paid to do, they can be a lifesaver if you’re pressed for time—or simply want to rely on the expertise of someone more experienced than you.
Table of Contents - Do You Need a Real Estate Analyst?
Working with a real estate analyst is a smart idea for major deals and new ventures, but if you’re looking to fix and flip or rent out single-family homes, you can get away with doing the research yourself. Here’s what you need to know about real estate analysts and how they can help you.
What is a real estate analyst?
A real estate analyst’s job is to be intimately familiar with real estate trends and statistics, whether in a specific area, across the province or the entire country. They make recommendations for investments, based on current commercial real estate trends—so if you’re wondering whether that 50-unit apartment building is likely to recoup your investment, an analyst is the person to ask.
Real estate analysts also meet with buyers and sellers to identify investment opportunities. They negotiate or help negotiate deals and help manage their employer’s real estate investment portfolio. That means they analyze the portfolio’s investments versus the long term financial goals and risk tolerance. Then they can make suggestions as to where to invest when to sell and what to look for in the future.
Many real estate analysts start the job fresh out of college, as a way to get to know the real estate industry. They assist senior members of the team on various tasks, particularly research and preparing or organizing documents for deals.
Depending on how experienced you are in the real estate investment field, you probably already do the duties of an analyst on your own. For example, real estate analysts might research the market trends of a particular geographic area, or try to forecast what kind of rent growth is possible for that specific asset and asset class. They might research the tax structure and requirements for a particular municipality or create financial risk assessments.
Analysts are also helpful with the mountains of paperwork that come with any real estate transaction. They can handle everything from sales prospecting letters to creating marketing materials and writing letters of intent, deal memorandums and more. As you undoubtedly know from reading this website, there’s a lot of time, research and paperwork involved with putting together a real estate deal—analysts can take the bulk of that work off your hands, so you can focus on providing the capital.
How real estate analysts can add value to your portfolio
If you’re investing in real estate as a company, hiring a real estate analyst will help you assess risk and diversify your portfolio safely. You can either work with a full-time analyst on your premises or hire a third-party company to take care of analyst duties on their own. This frees you and your full-time employees up to focus on your other duties, especially because you won’t be managing another employee. Generally, outsourcing your real estate analyst duties is a good way to get high-quality help when you need it, rather than committing to paying a full-time employee. Of course, that depends on how large your company is and what portion is dedicated to making real estate investments. If that’s the bulk of your business, hiring someone full-time makes far more sense.
Another way real estate analysts can help is when you’re looking to break into a new market. You can do the research yourself, but nothing compares to working with an experienced individual who does the same work day in and day out. For example, if you’re focused in Vancouver but want to determine whether a multi-family complex in the Golden Horseshoe is a wise investment, your analyst can use their connections and industry knowledge to prepare a report for you. Since the key to long-term financial success is diversifying your portfolio, working with an analyst can help you make smart decisions. After all, we always recommend teaming up with experts in the field, like a great mortgage broker and real estate attorney; analysts can be similarly valuable.
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Do you really need one?
This probably all sounds pretty great—outsource the bulk of the tedious work so you can focus on buying, selling and developing properties. If you’re in a position to hire an analyst, it is an excellent way to save time and make sure you’re getting great deals. However, there are two things to consider.
First, as we mentioned earlier, you can do all of this work yourself—and if you’re just starting, you might want to do so, just to gain a full understanding of what real estate investment involves. Hiring an analyst also costs money, which will cut into your profits. If you don’t already have a steady, adequate cash flow going, the cost of hiring an analyst might set you back further than you need to be.
Second, you should consider what, exactly, an analyst will take off your plate. If you’re only doing minor deals here and there to supplement your income, you can save the money and invest your time instead. However, if you’re working on major commercial deals regularly, an analyst can help take a lot of work off your plate.
Ultimately, the best way to determine whether you need and can afford a real estate analyst is to contact firms and discuss their rates and duties. You might find that they’re out of reach for the moment—or you could find that they’re worth every penny you pay.
Licenses and Certifications That Actually Matter For Real Estate Analysts
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