Should I fire my Real Estate Agent based on suspect advice?

[Brett Hoover]

Should I find a new real estate agent?

Small Multi family deals are hard to find in Atlanta, not seeing many deals that are even close to the 1% rule.

I ran a property I was looking at through my spreadsheet that accounted for rental income, debt services, expenses (insurance, property management, maintence expenses, vacancy rate ), calculated NOI, cash flow, cash ROI, Cap rate.

In this case it was listed for $150,000 and the only way I could see making it work was offering $100,00 to account for all the built in expenses. 

My agent said that in this market (Atlanta) there is not going to be a perfect property and that I will never get a property running it through those formulas. Accounting for vacancy, property management ect.. would never allow me to get a property b/c I'm talking myself out of it before I begin.

 He said that now investors are “buying income/cash flow” as in putting down large amounts of cash to make a deal work. So they are finding a property that is made of good material (brick) in a good neighborhood and then putting down large amounts of cash to make it cash flow, even if the rent to value ratio is well below 1%, b/c they are buying good cash flow. 

Is that a good mindset to "buy cash flow"? Should I find a new real estate agent? He does a good job and is very responsive and a “go getter” but one part of me doesn’t trust him as he has the motivation to just get me to buy something so he can get a commission. I want a partner who will help analyze deals and set me up for success in buying my first property. 

My real estate agent tells me I should be flexible/change my formula when accounting for expenses in order to find a deal, is this smart? #askBPpodcast 

Should I "buy income" and put large amounts of cash down on a deal?#askBPpodcast 

[Joel Owens]

Yep Atlanta has small multi's  being traded at stupid money levels. I think your agent is just telling you what the market is doing.

You might find you need to exploit another type of product in this market if that one is too frothy.

I work on millions to multi-millions in commercial deals but I do look at what 2 to 4 units trade at in good areas. The prices are nuts frankly buying on the future that rents will keep increasing at an above average historical pace. These properties there is almost no cash flow but they are either holding for retirement, living in one unit and renting three going FHA, or trying to buy high end quality areas hoping for rent growth and appreciation to eventually catch up to a decent return.

Too me that is gambling and not investing yet the herds do it to their hearts content. Unless you get a property which is not listed and do some rehab to increase value it will be tough for the numbers to work.

Get your brokers/agent to call the banks listed on the FDIC website in your area to see if they have any properties in foreclosure or troubled loans where you could do a short sale with an owner the bank wants help with. Need to find something off the grid to extract value that other buyers do not know about.