This post was written for The Rentables Apartment Blog as the third part of a series entitled “Building Your Real Estate Investment Team.“
If you’ve read (and followed) part 2 of this series, you may have already lined up your financing for your next investment property purchase. Assuming you’ve arranged the funding for your next deal, you may want some help figuring out how to select a property that will make a good investment. In part 3 we explore what you need to know in order to select a Realtor who will help, rather than hinder, your real estate investing career.
The bottom line is you are looking for a Realtor who understands your goals and your investment system, and someone who is an expert in their geographical area. A good Realtor will filter out the fluff to bring you properties that actually fit your system and get things done in a timely manner.
Real Estate Investment Team selection criteria
As this series goes on, you’ll see this list again and again. It’s not here to fill space, it’s here because it is important. Your Realtor will be the member of your team which you work with most on the acquisition side, so you will want to choose carefully. Look for a Realtor who:
- Owns investment real estate themselves
- Cares about your goals
- Has the appropriate qualifications
- Has specific experience working with investment properties in the area
- Has reasonable fees
- Provides positive chemistry
Why Add a Realtor to Your Team?
A Realtor is (or should be) an expert in their geographic area. These professionals know their areas inside and out, and can give you all the details you need on a town or city and the individual neighborhoods within that town or city. A Realtor will be able to tell you about local amenities including schools, shopping centers, parks, hospitals, and public transportation. They will also be able to point you towards neighborhoods with the greatest upside potential, and steer you away from those in decline.
When you are ready to drill down and start looking at some properties, Realtors have MLS access and often get listing details from their local board before they make it to the public side of the national MLS system. In competitive markets this advantage can have a huge impact. Realtors also have access to a greater level of detail on listings which you won’t get working on your own.
A Realtor can help you make offers and handle negotiations. In the beginning stages of your investment career having the support of an experienced professional in this area can help push the deal along and help you get the terms you are looking for. They’ll also be able to guide you throughout the purchasing process and help with the paperwork that ensues.
As experts in their area, Realtors usually have a team of trusted professionals they refer their clients to. If you are looking to round out your team, a good Realtor can usually provide you with some recommendations to round out your real estate investment team.
As a buyer, your Realtor’s services are usually free. Often, especially amongst first time buyers, there is an urge to find properties on their own to save money and avoid paying commission which is misguided. Traditionally the seller pays the commission out of the sale proceeds, so working with a buyers agent costs you nothing as a buyer. Rarely in life do you get something for nothing, but on the purchasing end the seller foots the bill for your Realtor’s hard work. Enjoy it now since you’ll be “paying it forward” when you eventually sell down the road.
Finding a Realtor
When buying a home as your primary residence, it is pretty easy to find a Realtor to work with since most agents focus on this segment of the market. When looking for an investment savvy Realtor to add to your team it is often best to seek referrals from other investors. Sure you might have some competition when a good listing comes through, but at least you’ll be working with someone familiar with investment properties and this alone will make your life much, much easier.
As with most other professionals, there are some specific qualifications to look for when selecting a Realtor. These change depending on jurisdiction, but look for a someone who is licensed through your local real estate board and a member of local, regional and national organizations.
Investment specific experience
As with any member of your team, be sure to find someone with investment specific experience. There are a lot of agents out there, but most of them specialize in selling properties to call home rather than properties for investment purposes. Look for someone who commonly deals with investors and owns investment real estate themselves. These individuals will be best informed, best able to understand your goals, and best able to provide the type of service you are looking for as an investor.
Once you have a few Realtors in mind, consider whether they meet the 6 criteria above. If they do, and they pass your gut check, then get to work with them and stay tuned for tips on selecting a Real Estate Lawyer in Part 4 of Building Your Real Estate Investment Team.
Watch out for people who try to sell your properties that don’t fit your system, and always do your own due diligence by checking the facts and figures.
Building Your Real Estate Investment Team Series:
Building Your Real Estate Investment Team – Part 1: Introduction
Building Your Real Estate Investment Team – Part 2: Selecting a Mortgage Broker
Building Your Real Estate Investment Team – Part 3: Selecting a Realtor
Building Your Real Estate Investment Team – Part 4: Selecting a Lawyer
Building Your Real Estate Investment Team – Part 5: Selecting a Home Inspector
Building Your Real Estate Investment Team – Part 6: Selecting an Insurance Broker
Building Your Real Estate Investment Team – Part 7: Selecting a Property Manager
Building Your Real Estate Investment Team – Part 8: Selecting an Accountant
Building Your Real Estate Investment Team – Part 9: Conclusion
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