First Time Out of State Investor

[Joey Ly]

Hi BP Community,

Hope all is well with you. I'm new to BP and a first time investor looking to do my first deal in Missouri. I wanted to get your thoughts on something as it is rather unconventional to me (due to my lack of experience) and wanted some feedback. 

I've reached out to agents in that area and spoke with property managers, but have received fairly vague answers. Why are agents referring me to property management company that (owns)/have properties in the area that they want to sell to investors and saying to deal directly with the PM company? I thought the normal conventional route would be to get an agent to write offers on the property, rather than going straight and purchasing from a PM company. Would I also need to pay an agent to write an offer or could I purchase directly from the PM company and they get a buyer's commission? The PM company would also be charging a finders fee (if you will) for each property I close with them (for approximately half/one month's rent) for initial efforts and research.

The pros that I see to this would be the streamlined process and speaking to primarily one entity/person, and if I'm buying from the PM company, it would be an obvious route to also hire them to manage the property as a courtesy. The con I see is that this is an added fee on top of purchase price.

[Frank Geiger]

It's a little strange to have an agent refer you to a PM company but I kind of like the idea because their whole inventory are rentals. Some owners may have some deferred maintenance or problems and be tired of owning the properties. A likely cause is the competitive market and the agent not willing to put in a ton of effort to weed through 100 properties with you and negotiate a good price. But to answer your questions.

1) You don't pay the agent to purchase a property; the seller does

2) Half a months rent (about $500-$1000) isn't much. Just add it into the numbers. It's much less than a wholesale fee.

Additionally, I would not assume the PM company is any good. Due diligence needs to be performed even if the buying process is going smooth.