New investor, should I use a Realtor?

Question

Looking for BRRRR properties. How should I go about analyzing deals to make sure they are going to work? Should I consider using a realtor until I'm comfortable enough to make these decisions myself? Also what has worked with you guys when first investing and getting over that fear of making the first purchase?

Thanks in advance

Tony Angelos · Answer

@Ethan Partee working with a broker on the buy side will cost you nothing additionally, but will be an important member of your team especially as a new investor. You likely don't have the experience or  even really the understanding of how you should run comps (acquiring the property then what the ARV would be); you may or may not have relationships with contractors; lenders; attorneys; inspectors; etc...

As others have said, interview a few in your market to see who you connect with. Keep in mind general red flags you'd look for when hiring any service level position: promptness, professionalism, track record, resources (are they standalone or a team), etc.

Jesus Roman · Answer

Hey @Ethan Partee,

Jesus here from Houston,Texas. You can never go wrong with going with a realtor in my opinion, essentially the best thing you can do is interview multiple realtors that fit your needs and you feel comfortable working with. Especially in such a hot market right now you don't want to go into a deal under represented and come out losing on the end because you wanted to save 3%. Keep in my mind whatever deal you go into they will have someone looking over them for their best interest and you as well should have someone looking over you for your best interests. As far as taking that leap what worked for me is that I ran the numbers made sure everything made sense and went for it. Hope this helped some and cant wait wait to hear about your first BRRRR deal! Cheers!

Bob Stevens · Answer

@Ethan Partee heck no, they do not have anything but props on MLS.  Simply connect with those doing deals, learn and do .

Good Luck

Nate Sanow · Answer

@Ethan Partee

As an agent I might piss off agents but I’ll say something unorthodox: Maybe.

It depends A LOT on if that agent has PERSONALLY invested. If they haven’t PERSONALLY invested I’d suggest only using them for an investment if they have served no less than 5-10 investors or CLOSED 5-10 investment deals.

Otherwise you might get a lot of advice based on something being cute, charming, or worse yet, something that has “potential.”

Of course, in many ways agents can be wonderful. I know many good ones who then inspired me to get my license.

Maybe a better way of answering this is to say yes, it could help you when closing a deal, just don’t let yourself be limited and feel free to also get a lot of advice from unlicensed investors.

Just don’t take their word as gospel when it comes to investing. Trust, but verify.

Todd Pultz · Answer

@Nate Sanow

@Ethan Partee I agree with Nate! Most realtors do not understand investments. First you have to find a realtor that either primarily only works with investors and can show that, but ideally find a realtor that has built a successful portfolio themselves. When you find a investor/realtor you have to weed them out quickly by asking them casually what their goals are personally for investing! Why? You do not want their crumbs when they keep the good deals if you’re both focused on the same thing. Example, as a investor I’m focused on larger multifamily family add at this point in my career, so I would not take on another client wanting to focus in the same area. However, I would take clients looking for anything else. You have to have a realtor that’s not afraid to tell you to walk and one that does not give a crap about making a commission check because they are successful elsewhere!

Ethan Partee · Answer

@Tony Angelos your absolutely right, I have little experience with running numbers. I do have contractors and inspectors I’ve used in the past on who have been great, but currently don’t have and lenders. Thanks for sharing your advice

Scott Swanson · Answer

Hi Ethan,

You didn't mention what market you're interested in. But try to hook up with a realtor that works with investors. They may be able to provide you with some good deals that are not listed or about to be listed. Best of luck.

Jason Dillard · Answer

I've been in Greenville SC investing for over 20 years.  I don't take clients for single family stuff, but I'd be glad to help?

Kai Van Leuven · Answer

@Ethan Partee

I would hold off on buying an “investment” until you know what you are investing in. Most agents are looking to sell. That is how they make money. It’s the same with any other type of business. If you don’t have the education yet on the industry, I would work on that first.

Talk to everyone. You would be surprised. Just recently I started a new project where I was trying to see if I could start a HML group. I told a few people what my plans are and I had 3 of them tell me they had a million bucks in their bank account and would be open to it. I was a little taken back... you never know.

My point is, tell everyone what you are doing and learn the business. Then start buying.

Tim Jacob · Answer

Starting out I would be careful with off market deals.  A lot of them are C grade at best.  I recommend investors start at a higher grade asset then go lower if comfortable.  In general the lower the asset the more you are buying yourself a job.  I know they are cheaper but the expenses add up and you wont find a reliable pm.  That doesnt even factor in title issues. I've worked  with atleast 1 person who I am fairly certain would  have no issue selling 3 people the house off a quitclaim deed and running away with the money.  Thats where that happens so famiarize yourself with title issues and a good title company if you go that route.  Definitely not the cheapest either if purchasing off market and get title insurance.

The worst thing you can do is purchase wrong then try to get out of it asking a pm to do things that take your entire profit bc of asset class because you dont want to do it.  I do think education is best up front.  I think most people you know assuming you dont only hang out in investor circles wont really know that much but some of them love giving advice even if they dont have a clue.  I would get education from books and here but at some point you will need to take the plunge.  After some asking around and taking friends and families opinions with a grain of salt depending on who they are you should have enough to start.  One thing I will say is when you ask around Im sure someone will recommend a realtor.  I really recommend you look into who they are.  Most realtors don't help investors.  Just because they are friends, family, or recommended by one that helped them purchase or sell a primary residence doesn't mean they know how to help you.  It is a different set of skills to be an investors agent.  Expense analysis is key.  With the flip or refi comps speak for themselves and then its a matter of contractor estimates but rental expenses is most key so getting someone who knows that is key.  You should attempt your own numbers but if someone with a lot more experience can go over you theres as to why they are what they are than thats better than someone else that has no clue how to do that.  Make sure you get that person.  Thats what I do for my clients.  Im sure you can find someone else that can do that in your market if you dig hard enough.  Like others said purchasing is where you make your money do it right or you are fighting an uphill battle.

New investor, should I use a Realtor?

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