How do you effectively choose a real estate agent: The Real, Real Estate Agents?

[Jason Xenakis]

Hello folks. First post. Happy to be here. My wife and I decided to  start out of state rental investing in Columbus Ohio. How can one, who has only rudimentary knowledge in real estate without any boots on ground experience (read a few books), effectively choose a real estate agent? We are both physicians and relatively intelligent humanoids, but without knowing what you don't know, it seems a difficult task. Is it about first impressions? The vibe? What are some red flags? What nuanced questions can I ask? Thanks in advance!

[James Hamling]

Quote from @Jason Xenakis:

Quote from @Remington Lyman:

Quote from @Michael P.:

Aren’t doctors busy enough why do you want the headache of some random house in some random city. Is it a romantic notion of getting rich in real estate investing.

 There is a guru course that is pitching them on buying real estate so they can change their tax status to real estate professionals

Yes I've definitely seen this at conferences.  

And how does that work? 

Simply owning some investment real estate does not make one a real estate professional anymore than owning some stock's makes one a Stock Trader....

To qualify for real estate professional status (REPS), you must meet the following requirements:

• 50% test: More than half of your personal services must be in real property trades or businesses.
• 750-hour test: You must perform at least 750 hours of services in real property trades or businesses.

[Remington Lyman]

Quote from @Jason Xenakis:

Quote from @Remington Lyman:

Quote from @Michael P.:

Aren’t doctors busy enough why do you want the headache of some random house in some random city. Is it a romantic notion of getting rich in real estate investing.

 There is a guru course that is pitching them on buying real estate so they can change their tax status to real estate professionals

Yes I've definitely seen this at conferences.  

It's a good way to sell courses. My accountant says it's hard to do and an easy audit. But in my experience, if you ask the opinion of five accountants on anything, you typically get five conflicting opinions.

[Adam Bartomeo]

Finding an agent is like finding a good deal, you must first underwrite at least 100 deals until you are comfortable to know if it is a good deal. You are going to have to interview a LOT of agents as the industry is full of dummies. About 5% are good...

[James Wise]

Quote from @Adam Bartomeo:

Finding an agent is like finding a good deal, you must first underwrite at least 100 deals until you are comfortable to know if it is a good deal. You are going to have to interview a LOT of agents as the industry is full of dummies. About 5% are good...

 The annual failure rates is around 88%. I suppose one could make the argument that 12% of the Agents out there aren't dummies, but you're right, it's actually probably even lower than 5% lol. If we are talking about Agents who aren't dumb and specialize in investments, it's got to be a fraction of a %.

[Adam Bartomeo]

@James Wise True story

[Becca F.]

I've attended many open houses in my local area and interacted with a lot of agents, in California and OOS. I'm in disbelief about the lack of knowledge - I'm not an agent. For example in wildfire areas here, buyers aren't able to get traditional homeowner's (or rental dwelling insurance if an investor) insurance and conventional Fannie Mae and Freddie Mae loans. They have to get non-QM loans and pay high insurance rates. I mentioned this to 2 agents and they looked at me like I was a space alien. 

Next time I go to an open house, I'll ask one of them if I were to buy this as a rental do you think it would work as an LTR, MTR or STR and what's the cash on cash return and median rent in this neighborhood. I don't think most of them know anything about landlord-tenant laws which varies by city in the Bay Area. Even investor-friendly agents (I dislike this term, not sure how others feel about it) have been incorrect on some of things that were stated to me.  As far as OOS, that's whole other story 

[James Wise]

Quote from @Becca F.:

I've attended many open houses in my local area and interacted with a lot of agents, in California and OOS. I'm in disbelief about the lack of knowledge - I'm not an agent. For example in wildfire areas here, buyers aren't able to get traditional homeowner's (or rental dwelling insurance if an investor) insurance and conventional Fannie Mae and Freddie Mae loans. They have to get non-QM loans and pay high insurance rates. I mentioned this to 2 agents and they looked at me like I was a space alien. 

Next time I go to an open house, I'll ask one of them if I were to buy this as a rental do you think it would work as an LTR, MTR or STR and what's the cash on cash return and median rent in this neighborhood. I don't think most of them know anything about landlord-tenant laws which varies by city in the Bay Area. Even investor-friendly agents (I dislike this term, not sure how others feel about it) have been incorrect on some of things that were stated to me.  As far as OOS, that's whole other story 

 Yup, lack of knowledge is a hallmark of the industry. As a side note, you won't find any investor agents at open houses. If they are truly investor focused agents there is no reason they would ever be doing an open house.

[Russell Brazil]

Quote from @James Wise:

Quote from @Becca F.:

I've attended many open houses in my local area and interacted with a lot of agents, in California and OOS. I'm in disbelief about the lack of knowledge - I'm not an agent. For example in wildfire areas here, buyers aren't able to get traditional homeowner's (or rental dwelling insurance if an investor) insurance and conventional Fannie Mae and Freddie Mae loans. They have to get non-QM loans and pay high insurance rates. I mentioned this to 2 agents and they looked at me like I was a space alien. 

Next time I go to an open house, I'll ask one of them if I were to buy this as a rental do you think it would work as an LTR, MTR or STR and what's the cash on cash return and median rent in this neighborhood. I don't think most of them know anything about landlord-tenant laws which varies by city in the Bay Area. Even investor-friendly agents (I dislike this term, not sure how others feel about it) have been incorrect on some of things that were stated to me.  As far as OOS, that's whole other story 

 Yup, lack of knowledge is a hallmark of the industry. As a side note, you won't find any investor agents at open houses. If they are truly investor focused agents there is no reason they would ever be doing an open house.

 I dont necessarily agree with that. Investors sell houses to members of the general public. We have 4 properties on the market this week all being sold by investors but with target buyers of the general public. All of them are being held open.  

I dont think an open house is a good place to look for an investor agent, but theyre at them blending in selling those houses too.

[Michael Diossa]

For me it's how pushy they are to try and get you to buy/sell. This gives me the impression they care more about the sale then what you actually want and need.

Granted yes they make their money on the sale and not jut being nice.

[James Wise]

Quote from @Russell Brazil:

Quote from @James Wise:

Quote from @Becca F.:

I've attended many open houses in my local area and interacted with a lot of agents, in California and OOS. I'm in disbelief about the lack of knowledge - I'm not an agent. For example in wildfire areas here, buyers aren't able to get traditional homeowner's (or rental dwelling insurance if an investor) insurance and conventional Fannie Mae and Freddie Mae loans. They have to get non-QM loans and pay high insurance rates. I mentioned this to 2 agents and they looked at me like I was a space alien. 

Next time I go to an open house, I'll ask one of them if I were to buy this as a rental do you think it would work as an LTR, MTR or STR and what's the cash on cash return and median rent in this neighborhood. I don't think most of them know anything about landlord-tenant laws which varies by city in the Bay Area. Even investor-friendly agents (I dislike this term, not sure how others feel about it) have been incorrect on some of things that were stated to me.  As far as OOS, that's whole other story 

 Yup, lack of knowledge is a hallmark of the industry. As a side note, you won't find any investor agents at open houses. If they are truly investor focused agents there is no reason they would ever be doing an open house.

 I dont necessarily agree with that. Investors sell houses to members of the general public. We have 4 properties on the market this week all being sold by investors but with target buyers of the general public. All of them are being held open.  

I dont think an open house is a good place to look for an investor agent, but theyre at them blending in selling those houses too.

 We both know open houses don't sell houses. So the question is, are the agents you have working these open houses really investor agents? Only reason to do an open house would be to generate new buyer leads. If it's an already renovated house the buyer leads aren't investor buyer leads.

[Russell Brazil]

Quote from @James Wise:

Quote from @Russell Brazil:

Quote from @James Wise:

Quote from @Becca F.:

I've attended many open houses in my local area and interacted with a lot of agents, in California and OOS. I'm in disbelief about the lack of knowledge - I'm not an agent. For example in wildfire areas here, buyers aren't able to get traditional homeowner's (or rental dwelling insurance if an investor) insurance and conventional Fannie Mae and Freddie Mae loans. They have to get non-QM loans and pay high insurance rates. I mentioned this to 2 agents and they looked at me like I was a space alien. 

Next time I go to an open house, I'll ask one of them if I were to buy this as a rental do you think it would work as an LTR, MTR or STR and what's the cash on cash return and median rent in this neighborhood. I don't think most of them know anything about landlord-tenant laws which varies by city in the Bay Area. Even investor-friendly agents (I dislike this term, not sure how others feel about it) have been incorrect on some of things that were stated to me.  As far as OOS, that's whole other story 

 Yup, lack of knowledge is a hallmark of the industry. As a side note, you won't find any investor agents at open houses. If they are truly investor focused agents there is no reason they would ever be doing an open house.

 I dont necessarily agree with that. Investors sell houses to members of the general public. We have 4 properties on the market this week all being sold by investors but with target buyers of the general public. All of them are being held open.  

I dont think an open house is a good place to look for an investor agent, but theyre at them blending in selling those houses too.

 We both know open houses don't sell houses. So the question is, are the agents you have working these open houses really investor agents? Only reason to do an open house would be to generate new buyer leads. If it's an already renovated house the buyer leads aren't investor buyer leads.

 Did an open house last night. Placing it under contract in a few hours from an unrepresented buyer that came into the open last night. 

Only 7% of a homes end buyers end up coming from open houses. But thats still 7%. 

[James Wise]

Quote from @Russell Brazil:

Quote from @James Wise:

Quote from @Russell Brazil:

Quote from @James Wise:

Quote from @Becca F.:

I've attended many open houses in my local area and interacted with a lot of agents, in California and OOS. I'm in disbelief about the lack of knowledge - I'm not an agent. For example in wildfire areas here, buyers aren't able to get traditional homeowner's (or rental dwelling insurance if an investor) insurance and conventional Fannie Mae and Freddie Mae loans. They have to get non-QM loans and pay high insurance rates. I mentioned this to 2 agents and they looked at me like I was a space alien. 

Next time I go to an open house, I'll ask one of them if I were to buy this as a rental do you think it would work as an LTR, MTR or STR and what's the cash on cash return and median rent in this neighborhood. I don't think most of them know anything about landlord-tenant laws which varies by city in the Bay Area. Even investor-friendly agents (I dislike this term, not sure how others feel about it) have been incorrect on some of things that were stated to me.  As far as OOS, that's whole other story 

 Yup, lack of knowledge is a hallmark of the industry. As a side note, you won't find any investor agents at open houses. If they are truly investor focused agents there is no reason they would ever be doing an open house.

 I dont necessarily agree with that. Investors sell houses to members of the general public. We have 4 properties on the market this week all being sold by investors but with target buyers of the general public. All of them are being held open.  

I dont think an open house is a good place to look for an investor agent, but theyre at them blending in selling those houses too.

 We both know open houses don't sell houses. So the question is, are the agents you have working these open houses really investor agents? Only reason to do an open house would be to generate new buyer leads. If it's an already renovated house the buyer leads aren't investor buyer leads.

 Did an open house last night. Placing it under contract in a few hours from an unrepresented buyer that came into the open last night. 

Only 7% of a homes end buyers end up coming from open houses. But thats still 7%. 

[Tanner Lewis]

Hey Jason - I suggest checking out the BiggerPockets "Building your team -> agents" tab

[Becca F.]

A recent open house I went to started as a RE meet up by the facilitator who is an agent. The agent is an investor locally as well as out of state with a substantial portfolio in LTRs and STRs. He also knows landlord tenant laws well and has helped me problem solve. The open house was a flip, really nicely done - had it been 2018 or 2019 I think this home would have gotten multiple offers listed at just under $2 million but I don't think as many people want to live in San Francisco as pre-COVID. Everyone is moving out to the suburbs. 

This is a rare agent and also rare are the local agents I meet who aren't trying to push me to sell my Bay Area property to get a commission off me. That shows a lot of integrity to help me problem solve tenant issues, whether or not to value add to increase my rent, how much to increase the rent (in non-rent controlled SFH), etc instead of "why don't you just sell the house?" These agents will get referrals from me for my CA investor friends (including the ones messaging me on BP asking for agents).

[Jason Xenakis]

Quote from @Michael P.:

Aren’t doctors busy enough why do you want the headache of some random house in some random city. Is it a romantic notion of getting rich in real estate investing.

 We are way to busy. That the problem. I need a retirement strategy. 

[Wale Lawal]

@Jason Xenakis

To choose an agent for a real estate investor, research the market, ask for referrals, and interview multiple agents. Look for agents with experience, local market knowledge, communication style, and connections to resources. Test their responsiveness by sending follow-up emails or calls. Ask for references from past clients and trust instincts. Join online groups or forums for direct feedback and recommendations on agents. This process helps find an agent for your real estate investment needs.

Good luck!

[Becca F.]

@Jason Xenakis

If you don't live in Columbus, Ohio and know that market well, I would talk to property managers there before you start making offers - they know the median rents, tenant base, neighborhoods, etc. I wish I had done that before I made my offers (I bought in Indianapolis, not Columbus). I'm guessing since your and your wife are busy you would be using a property manager even if you lived near Columbus. Whoever you're buying a property from, an agent or wholesaler, won't have a vested interest in your property after the deal closes. The PM will be your business partner will be part of your RE team for a very long time. 

I think these are red flags when agents say this: "it's close to the 1% cash flow rule", "it's in an up and coming area", etc. You can already see some of these 1% cash flow posts by agents in the Columbus market on here. These are clues that the area is Class C or gentrifying area, which can either go well or terribly wrong for you as an investor. Class C is volatile - that's the short version of my story. Most investors who have been in the game long enough have a story where they lost money or had some nightmare situation. If an agent works with mostly primary home buyers, they might not be the right one to work with (see my comments above in the thread) since a primary buyer and investor have different goals. 

I would network with local investors for recommended agents and talk to at least 3 agents and ask them lots of questions. You can do this either by RE meetups and there are groups online (Facebook for example) to network with other investors. 

[Scott Allen]

@Becca F. You should visit Columbus if you're interested in the market (you should visit any market first prior to investing there if you can make a weekend for it). I always recommend clients to come here first and see neighborhoods in person if they can prior to making offers. You get a better sense of where you're investing and what all is going on in the city in general. A main thing that everyone should always do during their inspection period on a property is connect with at least 2-3 different property managers so they can get a better rent range/run numbers more other than listening to an agent that might not be as conservative in their numbers on projected rents. 

In Columbus, C Class properties are typically the 1% Rule and can cashflow more but it's highly recommended to not try and self manage them - use a property manager that is well versed in getting those units filled or kept on tract, post notice if necessary to prep for an eviction. In a gentrifying area, you can also find BRRRR's and flips - if the value is there, it can be worth pursuing. A Class properties - you usually don't need a property manager, you just need a leasing agent and contacts to call if something needs fixed/as well as the ability to be cashflow negative for 2-5 years. B Class properties - they usually can breakeven on paper, don't necessarily need a PM but if the deal can still work with them, then they're beneficial to keep on.

Are you self managing a C Class property in Indianapolis or did you need to find a property manager/leasing agent afterwards? Prior to investing where you did in Indianapolis, were you able to visit the market first or did you go based off of neighborhood graded maps and opinions from agents/property managers. I've heard it's a really good market for cashflow but don't personally own anything there. All the best!

[Becca F.]

Quote from @Scott Allen:

@Becca F. You should visit Columbus if you're interested in the market (you should visit any market first prior to investing there if you can make a weekend for it). I always recommend clients to come here first and see neighborhoods in person if they can prior to making offers. You get a better sense of where you're investing and what all is going on in the city in general. A main thing that everyone should always do during their inspection period on a property is connect with at least 2-3 different property managers so they can get a better rent range/run numbers more other than listening to an agent that might not be as conservative in their numbers on projected rents. 

In Columbus, C Class properties are typically the 1% Rule and can cashflow more but it's highly recommended to not try and self manage them - use a property manager that is well versed in getting those units filled or kept on tract, post notice if necessary to prep for an eviction. In a gentrifying area, you can also find BRRRR's and flips - if the value is there, it can be worth pursuing. A Class properties - you usually don't need a property manager, you just need a leasing agent and contacts to call if something needs fixed/as well as the ability to be cashflow negative for 2-5 years. B Class properties - they usually can breakeven on paper, don't necessarily need a PM but if the deal can still work with them, then they're beneficial to keep on.

Are you self managing a C Class property in Indianapolis or did you need to find a property manager/leasing agent afterwards? Prior to investing where you did in Indianapolis, were you able to visit the market first or did you go based off of neighborhood graded maps and opinions from agents/property managers. I've heard it's a really good market for cashflow but don't personally own anything there. All the best!

I used to live in the Indianapolis metro area then moved back to California so I knew the area but not on a detailed level. The Class A home is in a great suburb and I rented it out instead of selling it. It's done well with appreciation over 10 years and is still cash flow positive but my property taxes are a little high relative to home value.

I went off neighborhood maps and opinions from agents and other investors (one local and the others were in CA) for the Class C homes. I flew out there and did drive around the neighborhoods - they look much different in person than in photos and video tours (I do know a few CA investors who buy sight unseen in multiple states but I think their risk tolerance is higher than mine). I interviewed PMs after I went into escrow on Class C#1. I don't self manage any Indy properties - it was going to too much work screening tenants, showing the property and coordinating repairs from 2000 miles away with a demanding W2 job. I self manage one local SFH (Class A) here that I'm about 15 miles away from - that's enough self management for me.

[John Mason]

@Becca F. Awesome approach, it is best to meet with the agents in real life, see the neighborhoods and get the vibe in real life.

I usually talk to them on the forum for about 6 months and then take the next step..to see how dedicated and professional they are .

[John Mason]

Yes also be wary of agents who are Uber drivers at conferences.. does not reflect well on their agent capabilities