Vetting agents during first conversation

[Eric Telese]

Hello everyone. Before I make my first investment in RE, I want to establish contacts and find good agents to work with.

As i search for and begin to inquire about properties on the market, of course I instantly recieve phone calls from the agents. 

My question is what questions should I ask these agents during our first discussions?

Should I just be honest and let them know my situation- tell them I am looking to invest by 2018. May not buy this property but very well could purchase a different one months down the road, etc.

Is it recommended/proper to ask about current rental prices of the home, rental prices in the area, names of other contacts (handymen, PM companies, general contractors,  plumbers, etc.)

[Ryan Murdock]

@Kevin Siedlecki This is a good conversation.  I absolutely agree that no information is better than misinformation but both can send you to the poorhouse very quickly. 

I think a newbie without a mentor/experienced agent can be very dangerous. I'll use an example from my own past:

When I privately purchased a 20-unit portfolio early on in my investing career I obsessed over the numbers. Being reasonably intelligent and having a fair business sense I looked at my spreadsheets every conceivable way and padded all of my numbers conservatively. The deal looked good and met the "sound investment" criteria I was used to so I took the plunge and purchased the properties.

What the spreadsheets couldn't prepare me for was the nearly 2-years I spent systematically removing the population of deadbeat tenants and replacing them with tolerable ones. It couldn't prepare me for just how much deferred maintenance I was going to have to tackle in such a short period of time. I knew the buildings were rough but there were just so many surprises. 

I had calculated well on the safe side of all the normal industry benchmarks and got absolutely killed. It was a very costly learning process. I might as well have balled up my spreadsheet and tossed it out the window.

I survived the ordeal and still have those properties - they now perform wonderfully - but it if I hadn't had other resources to bail me out in the early stages I would have gone broke in the first year and lost them all.

It's for those kinds of reasons that I feel strongly about having someone who can give you first hand knowledge. If that's not a mentor it has to be the agent. 

Looking back, I see a million things on that deal that I missed but would easily catch if reviewing the same project today. Not so much from a numbers standpoint but from an operations standpoint. 

If I take a look back in another 10 years I'll undoubtedly see things I'd miss today. We should always find someone who knows more than us and learn from their mistakes. Gray hairs are expensive and I have a lot of them.

Find someone else with a lot of gray hairs and save a few of your own.