Buying FSBO income property

[Carlos Gamero]

I would be a first-time buyer of income property that I would finance through a bank. A duplex or a quadplex. Sometimes I run into properties that are listed by their owners on Craigslist or Zillow. Can I or should I hire an agent to help me navigate through the process and make sure everything's done by the book? The commission for that agent would typically be a fixed % of the sales price? Any other advice would be greatly appreciated, too. Thank you.

[John Evan Miller]

If you know how to do your due diligence, then you are looking for someone who can make sure the recorded closing documents are completed property. A title company can do that for you.

Here are a few things to make sure you have covered:

In today's mortgage market, getting bank financing can be a real trip. So your first step is to get pre-approved for a loan. Don't even start shopping for investments until you have done this. Pre-approval will (1) tell you how much you can buy and (2) it will make it more likely a seller will accept your offer and (3) the closing is much quicker.

I recommend making any offers contingent on a satisfactory inspection and review of actual profit and loss statements. You will want to hire a well recommended, licensed and insured property inspector to make sure the property does not have any major problems.

The next step is to look very carefully at the income and expenses to make sure that the property will be a good investment.

Another protection is to have Title Insurance on the property. In many states, the Seller will provide this as evidence of clear title. In other places, the Seller and the Buyer will split the cost.

If you know can handle these basics and have a reputable title company to work with, you can keep your expenses down while covering your bases.