Very interesting discussion with a realtor today...

Very interesting discussion with a realtor today...

Meridian, ID · Member since 2013 · 25 posts · 0 votes

I saw a house for sale today in Nampa, ID. It was listed for 40K. The ad said it needed some work. It was around a week old. I figured it was sold but I would give it a shot anyway. Th realtor got back with me a few hours later and said it just closed. -bummer-

I am just starting out and am wanting a new realtor so I asked if he worked with real estate investors. He said he did and asked what I was looking for. I told him I was looking to flip or do lease options. Those seem like 2 relatively beginner-friendly ways of staring out.

He then said I should try to get a buy and hold. I am interested in those, but don't have the kind of long term financing available to get into one yet. He then told me that this was a very tough venture I was getting into and that I am going against many people who do this for a living. I listen to the BP podcasts every day at work and am very aware of this. He then went on for around 10-15 minutes telling me how small the profit margins are, and how I would fail since I am just starting out and am going against the "big dogs" and this is nothing like TV.

I kind of laughed at that last remark. I'm not sure what prompted that...I rarely watch those anyway since they usually go over budget and time frame every episode it seems.

I guess my question would be, how hard is it to find a good real estate agent who does work with investors who try to flip? Craigslist seems to shoot me those kind of eggs.

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J ScottPro Member
Moderator
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
12y

I've yet to find a quality agent who *truly* understands investing and working with investors. Well, perhaps some of them do, but they'd rather make a buck than realy ensure the investor is getting a good deal.

Perhaps I've just had back luck, but I would recommend that if you really want to be buying listed properties, that you get your license and do it yourself.

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  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
    12y

    I've yet to find a quality agent who *truly* understands investing and working with investors. Well, perhaps some of them do, but they'd rather make a buck than realy ensure the investor is getting a good deal.

    Perhaps I've just had back luck, but I would recommend that if you really want to be buying listed properties, that you get your license and do it yourself.

  • Jerry W.Pro Member
    Moderator
    Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes
    12y

    Tough question to answer bud. Most of the experienced realtors are not going to want to spend a lot of time trying to show houses to a guy who wants to flip but has never done one. The new hungry realtors won't know nearly as much as the more experienced ones. I would suggest just getting active. Have your financing lined up with a letter from your banker on preapproval. Check out Zillow and HUD and other online sites to get ideas of price, amount of inventory, good and bad areas, etc. Then when you have a handle on what you can pay, where you want to buy, and your criteria to buy one you can tell them and they have specific things to look for. You may have to deal with a lot of agents before you get one that will work well for you.

  • Flipper/Rehabber · Greeley, CO · Member since 2013 · 2k+ posts · 1k+ votes
    12y

    It's a catch 22. The good experienced realtors are busy enough without having to work with beginning investors. The problem is 1/10 beginning investors or less actually end up buying anything. The experienced realtor knows this and works with the established investor or sellers, because that's a better use of their time.

    The younger agents have time and desire, but don't have all the knowledge needed yet.

  • Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
    12y

    Regarding "He then went on for around 10-15 minutes telling me how small the profit margins are, and how I would fail since I am just starting out..." You are dealing with the wrong guy. He should be listening to you and try to set you up to succeed, or if he can't do that to at least tell you how the "big dogs" succeed. This guy isn't (or shouldn't be) a player on your team.

  • Meridian, ID · Member since 2013 · 25 posts · 0 votes
    12y

    Hmm...good point. I keep hearing a lot about getting my real estate license. I went to one of those fancy guru courses and they said if I did get my licence I need to disclose this when I am making the deal...is this true, and does that adversly affect any deals?

  • Meridian, ID · Member since 2013 · 25 posts · 0 votes
    12y

    Hmm...good point. I keep hearing a lot about getting my real estate license. I went to one of those fancy guru courses and they said if I did get my licence I need to disclose this when I am making the deal...is this true, and does that adversly affect any deals?

    Oh and Chris, as soon as I heard the word can't I was instantly turned off. I refuse to have anyone on my team who uses that word. I believe there is an answer to every problem. Some just require more thought and creativity.

  • Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
    12y

    Having your license will not affect your deal. I of course diaclose every time i buy a property. The listing agents/title company employees don't even seem to notice that I'm the buyer as well.

  • Meridian, ID · Member since 2013 · 25 posts · 0 votes
    12y

    Thank you for all your comments. They were all very helpful.

  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
    12y
    Originally posted by @Richard Nash:
    I went to one of those fancy guru courses and they said if I did get my licence I need to disclose this when I am making the deal...is this true, and does that adversly affect any deals?

    On the contrary, when you tell a seller that you're a licensed real estate agent it generally lends credibility and makes the seller more comfortable. If someone is uncomfortable with you being licensed, I'd be a bit concerned about their intentions.

    Now, the one place having your license may impact you is in your marketing. Check the laws in your state...

  • Contractor · Scottsdale, AZ · Member since 2010 · 2k+ posts · 3k+ votes
    12y

    Richard -

    Some great feedback already provided here. The good and bad about realtors is that they're a dime a dozen. It only takes a couple hundred bucks and a couple months before you're licensed. There are great agents out there that are very experienced, it just may take some time and effort to connect with them.

    Either follow @J Scott suggestion on getting licensed on your own(he's a pro at this, so his advice should be held in high regard) or just keep shopping for a new agent who better understands and aligns with your goals.

  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    12y

    Hi Richard,

    The agent knows that buy and holds can be bought at higher sales prices.

    At 40k honestly those agents have to sell a h&ll of a lot of property to make decent coin.

    I am not a flipper myself but what I have heard from many experienced flippers is that the entry level flip margins have really started drying up everywhere. The reason is many newbies who might have 20k laying around are listening to a course getting hyped up and taking a shot at it. They are overpaying because they are not experienced. Banks love these entry level investor rookies as they pay more for the asset.

    So I have had conversations with experienced flippers who say margins used to be 25k to 30k a flip. Now with people overpaying and deals drying up they have moved to 15k to 20k a flip. With the tighter margins if anything goes wrong after taxes you really are not getting much of a return. So a strategy for some is to flip the next level up properties. Say if an entry level home is bought for 70k in your area rehabbed and sold for 140k then a step up would be a house bought for say 225k rehabbed and sold in the 300's. The flippers can get better pricing and spreads because less buyers can play in the space so the banks have to come down more. They are also moving to different asset classes that take more money to play with less buyers and more opportunities to make spreads in the current cycle.

    When an agent hears lease options, getting started with very to little money, looking for a property that is very hard to find to flip, etc. then they really hear this.A long shot with a low commission and a ton of time involved that probably will never lead to anything.

    If you are a broker/agent building a business you can't place a bunch of time and energy on long shots. If an investor wants to spend 6 months to 1 year trying to catch the big whale for a great flip that is understandable but investors need to also understand why agents do not want to do it.

    Frankly a lot of this no money down stuff, options, and all of that really was more robust when markets were frozen years ago. Now you have buyers who can put down 25% or more and want to play. I have many clients on the commercial side recently cashing out stocks because of volatility to put into real estate. Everyone has to start somewhere to get going and it's the American way. If you find an agent where you are THEIR only business then they might grind out a long shot for you. It is hard to break into the flips because the REO brokers already have the big boys buying up quick with all cash on their pre-list database. No appraisal from the HML or conditions etc.

  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    12y

    The reality is if you are just starting out as an investor with little to no money trying lease options and flips you are probably going to have to work with a newer agent who doesn't have much experience and a lot of time on their hands.

    Those agents will spend endless hours chasing the long shot with you to make it happen and shotgun offers all over creation.

    I can say there are many worthless agents out there that do not provide value and those are a dime a dozen. The brokers/agents that are very good at what they do are in high demand. It's not hard to rise above the competency level of many agents out there. They enter the profession not loving it and thinking easy money. They quickly find out it's not the case so many will try to put a closing together between working their JOB to feed the family. The upper 20% who do it for a career and make a lot of money are very busy. There are some who do it full time without another job but they are treading water barely paying the bills and getting by. They are not rising to the top in the industry and doing extraordinary things.

  • Hanford, CA · Member since 2013 · 5k+ posts · 1k+ votes
    12y

    @Richard Nash

    We have an amazing agent. We are investors and she is amazing. She helped my parents do a 1031 and buy 4 houses. She is helping us find houses and if all goes well we will close 3 houses by June. She has helped us write at least 3 or 4 offers that haven't goes through. She is all about helping us succeed. Plus the kicker is she is one of the best in the town. That being said, we treat her amazing and she treats us amazingly. We have another one back east who is amazing..

    I know there are a lot of agents who supposedly don't get investors. I also think investors don't get agents. Agents lively hoods are selling houses. I have referred investors before to my agent. Honestly they have totally embarrassed me to the point where I'm scared of referring investors again.

    I met an investor who asked for a great agent. I referred my agent. He asked her to spend all weekend showing him houses because his agent wasn't available. He then informed her that if found a house he would take the information to his agent.


  • Flipper/Rehabber · Temple, TX · Member since 2008 · 168 posts · 46 votes
    12y

    Richard-

    I am a rare type of broker as I am an investor to. Now most realtors just list and show property. However I see opportunity in helping people like yourself, if they find me or I find them. My strategy when flipping, if I am working with a newbie or a passive investor, is to locate the property, the investor buys, I make a commission. They hire me to manage the rehab project to learn, I make a management fee. Once it's ready to sell, I make a commission. So you can see I see the opportunity, "big picture". I make 3 fees in the one relationship and everybody wins. Now find someone like myself that has invested interest in your success.

  • Investor · Southeast, MI · Member since 2012 · 2k+ posts · 1k+ votes
    12y

    The problem with buy and hold real estate is that it's a long term, slow process. Most people don't have the vision to see it to the end. This agent that you talked to seems like a real Debbie Downer. I would find someone else.

    Buying a house and renting it out in that price range should make you a few hundred dollars every month. Not a lot of money. For the "get rich overnight" types, this sounds like a failure. For forward thinkers, they can see that by buying a lot of these, they will have a big income down the road. It's like farming. Farmers spend a lot of time and money with no income coming in. They watch the crops grow, and then cash in later.

    I suggest you find a young agent who doesn't have a ton of clients, but has a go getter attitude. Find the house your looking for and buy it. Good luck to you.

  • Residential Real Estate Agent · Cookeville, TN · Member since 2013 · 1k+ posts · 948 votes
    12y

    I agree with J. Get your license. Take control of your own business.

  • Nicole A.Pro Member
    Rental Property Investor · Baltimore County Maryland and Tampa Florida · Member since 2013 · 2k+ posts · 2k+ votes
    12y

    Can't you just find and buy properties on your own without a realtor? Look online at listings and if you want to flip, get on several wholesaler's buyers' lists. They'll email out deals.

    I've bought for buy and holding, but I never used an agent myself. I just contacted the seller's agent to view the property or I knew the seller from my local REIA.

  • Specialist · Rockland, MA · Member since 2010 · 7k+ posts · 2k+ votes
    12y

    @Richard Nash

    Welcome. Check out the REIA clubs for investor friendly agents. You can also call the club president and ask for referrals.

    Starting out the big ones might not have time for you. Ask them who they want you to work with from their office. When I said that to the largest REO broker in the state she gave me her son to work with.

    Brandon Turner put together an excellent article

    The Real Estate Agent’s Ultimate Guide to Working with Investors

    http://www.biggerpockets.com/renewsblog/2013/08/24/real-estate-agents-working-with-investors/

    Good luck

    Paul

  • Jessica H.Pro Member
    Flipper/Rehabber · Easton, PA · Member since 2013 · 224 posts · 36 votes
    12y

    I know how you feel, when we started we talked to 3 realtors initially and they all said pretty much the same thing. We found out later that one of them was actually buying up a lot of undervalued properties himself and rehabbing them..I guess he didn't want any competition. Shake the dust off your shoes and move on. Don't let anyone stop you from pursuing your dreams.

    I think the majority don't understand investors, don't want to waste their time....but there are some who do understand investing and are willing to put in some time with you. We have a few at our local REIA. I would say when you do find one treat them well and try to have all your ducks in a row to be able to make an offer. At first it might be a little slow as you are still learning but for subsequent ones be ready to move quickly.

    I second what J says about getting licensed, we are still working on that. I wonder if any realtors can tell me if other realtors readily "accept" newbie realtors who are mainly in it for investing? Do you find you are able to locate and secure properties as well if not better being a realtor yourself? I know some investors work with a network of realtors in different areas, I wonder how effective that method is?

  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    12y

    Jessica I think first I would take out REALTORS and call them agents. Some states they are actually called brokers instead of agents. My state of GA they are called agents and after 3 years of active status you can take the brokers exam. At that point you can be at a brokerage as an associate brokerage or open up your own shop.

    REALTOR is a third party NAR association and has nothing to do with real estate commissions giving license to practice real estate.

    You do have carrying costs yearly being licensed. So if you are only buying one a year the benefit might not be as large as if you are purchasing multiple properties. Most agents are accepting of others entering the business. The real key will be is the brokerage investor friendly meaning do they mind if you just buy occasionally for yourself and that's it or do they want you selling with clients full time??

    I had a bunch of agents at one time and got rid of all of them years ago. Just not a productive use of my time for the low transaction fee. Today I just do my own investments and work with clients directly on deals. I didn't start out that way 10 years ago and had to put in my time to gain knowledge and become very good at what I do.

    I do work with newer investors as clients but I am in the commercial real estate space. So a new investor might be selling off stocks, other residential property, etc. and wanting to enter the commercial arena. It's different that instead of showing them tons of properties I spend a lot of time educating on commercial cash flows models and how to conduct due diligence on these types of properties and what the financing will look like etc.

    Difference being a rock bottom low sales price for me might be 500k. Usual transaction is in the millions in price point or higher.

    I do hope Richard has great success. The flipping business is tough to keep it real because the ones that have been doing it for years it is drying up. So with their network if they are having a hard time sourcing more deals then a newbie just has that much bigger a mountain to climb. You just have to take the attitude that it will be very hard but worth it in the end.

  • Residential Real Estate Agent · Cookeville, TN · Member since 2013 · 1k+ posts · 948 votes
    12y

    The average Realtor thinks that an $80,000 house that can be bought for $70,000 is a good deal for an investor. I know, cause I've had several of them say to me "hey, I have this great deal that you should look at buying".

    And I also had a very top performing agent tell me one time that he "has no idea how I do what I do".

  • Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
    12y

    What i have found in my area is that if a property is a great deal and it hits the MLS , its under contract in hours , the agents already have a buyer lined up , or they buy it themselves

  • SFR Investor · Stillwater, OK · Member since 2014 · 168 posts · 37 votes
    12y

    You could marry one,or in my case FIL was and BIL is one.

    Or become friends with several I have one I fish ,with who tosses ideas at me

  • Investor · Peachtree Corners, GA · Member since 2014 · 1k+ posts · 1k+ votes
    12y

    @J Scott

    Do you mean all this time I didn't have a quality realtor? You and Carol sure had me fooled!

  • Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
    12y

    I tried the agent route , I was always an hour late , the good deals were gone before I got there . I changed my methods , I had to get to the houses before they got to the MLS . I just drove the areas I was interested in , looked for FSBO signs , tall grass , bad roofs, I talked to people in the neighborhoods . In a month I found a great deal , saw a FSBO sign go up and the owner was getting in his car . We cut a deal right there , with a handshake , put it on paper the next day .

    Dont be afraid to knock on doors . I heard no more times than yes , odds are eventually something will stick .

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