1ST TIME HOME BUYER, HELP!

[Manny Apodaca]

Buying a condo in Southern California as a primary home, long term, house hack, BRRR, 1ST time, investment....

1. What are possible pro/con of using/not using a real estate agent to close 1st deal? 

2. Pro/con of using seller's real estate agent instead of your own, to close 1st deal?

3. Can a real estate lawyer be enough to close 1st deal?

4. Any and All advice for a 1st time primary home investor?

Please and thank you!!!

[John Slater]

Hey Manny, coming from being both and investor and agent in so.cal.

1. Do you have the experience to buy your own property and not have someone who knows their stuff look out for your interest?

2. The sellers agent is: 1st the sellers agent, 2nd your agent.... We aren't in the market right now where working with the sellers agents is a leg up over using your own agent.

3. No idea, never heard of a real estate attorney doing it in cali.

4. Find a property that makes sense for you, assuming the numbers make sense, is if a property that will rent to cash flow when you decide to move on.

On a separate note, as the buyer you aren't paying for the agent, the seller is, so why not use one when it comes for free to you??

[Sarita Scherpereel]

Hi @Manny Apodaca It might be helpful to talk to an investor friendly realtor(s) in your area that can help guide you through this. Maybe attend a few meet ups in your area to find the right person to work with. Attending meet ups is also a great way to get local advice for all of these topics. I'm sure others will comment on here but I always find local experts will be your best resources. 

[Manny Apodaca]

Awesome information, definitely helps, good points.

Thank you John and Sarita!

[Manny Apodaca]

Quote from @John Slater:

Hey Manny, coming from being both and investor and agent in so.cal.

1. Do you have the experience to buy your own property and not have someone who knows their stuff look out for your interest?

2. The sellers agent is: 1st the sellers agent, 2nd your agent.... We aren't in the market right now where working with the sellers agents is a leg up over using your own agent.

3. No idea, never heard of a real estate attorney doing it in cali.

4. Find a property that makes sense for you, assuming the numbers make sense, is if a property that will rent to cash flow when you decide to move on.

On a separate note, as the buyer you aren't paying for the agent, the seller is, so why not use one when it comes for free to you??

[Jared Trindade]

Quote from @Manny Apodaca:

Buying a condo in Southern California as a primary home, long term, house hack, BRRR, 1ST time, investment....

1. What are possible pro/con of using/not using a real estate agent to close 1st deal? 

2. Pro/con of using seller's real estate agent instead of your own, to close 1st deal?

3. Can a real estate lawyer be enough to close 1st deal?

4. Any and All advice for a 1st time primary home investor?

Please and thank you!!!

 Hey Manny, congrats on taking your first steps, and welcome to Bigger Pockets. I hope you'll find it a rather fruitful community with many different perspectives. 

At the end of the day, it's your team, your investments, your business. Treat it as such. Most people likely wouldn't run a company without covering their own butt. I highly recommend you do the same thing. Protect yourself as much as possible. Protection comes in the forms of diversification, market spread, and most importantly your team. 

Find a local agent/realtor, or another investor with more experience, use them for resources in your local market. Try to make connections, and then VET VET VET VET. Check references, check photos, reviews, have conversations, ask the tough questions. 

Sound mind, with sound goals, and a support system will lead you to a much more advantageous position of understanding what you are doing, how to do it, when, and most importantly why. You listed as a primary residence, and have 3 different strategies proposed. When the time comes to make a decision, have your goal in mind, and ideally leave yourself room for a fallback option. If you intend to househack, instead of BRRRR you obviously need to live. If you are going to just try to BRRRR it, then that's a very different process you are looking at, and potential need for Property Management, ect.

Find people who can shed clarity on your vision, and hold you accountable to it. You'll find more value in working with someone who is not a "Yes" man, find someone who has no problem telling you no. A good agent will lead you to the right spring to drink water from, and help you avoid potholes. 

REI is risky, hence why it's an investment.

Do not run into deals unprepared. Personally I am happy to spend the extra buck for peace of mind, and quality service. Everyone has a different view on that however. 

Hope this provides some value for you Manny!

Cheers!

[Drew Sygit]

@Manny Apodaca

So, you'll want to form a Tripod Team: Agent, Lender & Property Management Company (PMC).

Agents & lenders are transaction based, so few of them will really "be there" for you if something goes wrong after a sale. The PMC you hire will have to deal with whatever you buy until you sell it or you part ways. So, you may want to get them involved on any purchase ASAP, for their feedback before you sign a purchase contract.

Regarding selecting a PMC, they can make or break your investments! When a property owner first contacts us and their initial question is "how much do you charge?", it's a sign they have no clue what they are doing. If they knew what they were doing, their initial questions would be about the services offered and systems in place to deliver those services consistently!

We recommend you read our series here on BP: How to “Screen a PMC Better than a Tenant”: https://www.biggerpockets.com/member-blogs/3094/91877-how-to-screen-a-pmc-better-than-a-tenant-part-1-services-and-processes

If you focus on putting together a good team and can get them working together, you dramatically increase your chances of investing long distance successfully.

[Ashley Undercuffler]

Quote from @Manny Apodaca:

Buying a condo in Southern California as a primary home, long term, house hack, BRRR, 1ST time, investment....

1. What are possible pro/con of using/not using a real estate agent to close 1st deal? 

2. Pro/con of using seller's real estate agent instead of your own, to close 1st deal?

3. Can a real estate lawyer be enough to close 1st deal?

4. Any and All advice for a 1st time primary home investor?

Please and thank you!!!

Hi Manny! These are all great questions and I'm happy to throw my two cents in. A little background about me: I have been an investor for the last nine years and only recently have decided to get my real estate agent license in California and join a team, so I completely understand both sides.

1) having an agent is very helpful because they have access to the multiple listing service MLS. If you decide to go with an agent, it would also be helpful if they have access to off market deals. For instance, I work on the David Greene Team and we work hand-in-hand with a lot of investors on off market deals as you can imagine. I would say interview a couple agents and make sure you ask them if they have access to off market deals. An agent will also ask what your parameters are and sort through the listings to find you only the ones that fit your criteria. The agent will also facilitate all of the paperwork and be able to advise you on your due diligence. Agents also typically have a lot of connections and know a lot of people in the industry to refer you to. Such as financing brokerages, home inspectors, etc. These are just some of the pros.

A con is you'll pay between 3-6% of a commission fee to an agent for doing this work for you.

2) if the seller becomes the buyers agent also, this is called dual agency. You will still pay the commission to the agent. The only thing that is concerning is that if any thing happens legally, the agent will not be able to advise you or the seller in court/arbitration. Most broker chose don't recommend it because of the legal aspect however it is completely acceptable and does happen. 

3) if you don't use an agent, it is highly advised to have a real estate lawyer involved. They can give you advice, but that's it. There will still be the seller's agent, a transaction team, the bank and an escrow company involved. 

4) being a first time homebuyer can feel overwhelming. Southern California can be difficult to navigate as well. If you're buying a condo, make sure you look into the homeowners association fees prior to making an offer. There might be litigation, which usually involves a higher HOA fee than normal, even if you're new to the complex. When buying any property, find out if there is Mello Roos in that area. That means that they tax your property additionally to cover the cost of schools and other properties for the area. Make sure you look up the crime rate as well, especially if you're looking to house hack because you're inviting others to live with you. If you're looking to BRRRR a deal, I would suggest finding a good general contractor or construction team in the area prior to making the purchase have a conversation regarding how long the projects take so you know how much money out of pocket it's gonna cost you each month that you own the property. The book BRRRR is fantastic for getting you prepared for it too :D

I know this is a lot of information but hopefully it gets your brain thinking! Feel free to reach out to me if you'd like to continue the conversation. I'm happy to help!

Have a wonderful day!

Ashley Undercuffler

[Dave Skow]

@Manny Apodaca  thanks 

1. if possible - using a real estate agent makes sense  if this is your  1st deal  as   a good  agent can help a ton  with many factors ...once you have  more  experience you might try to  get  by  not using a  realtor 

2. beware of using seller's real estate agent as you likely will not  get a  100%  true  effort or  feedback from using the listing agent .....if you do this - make sure to ask for a  discount on the  price you pay or  ask this  agent to  provide  you with a  concession you can use to paythe loan costs 

3. closing with a real estate lawyer should be OK  but  make sure they are  experienced and  have E and O insurance ...you will  also need to get  title insurance from a  title  firm

4. other  advice -  get loan aprpoval  in place and ask  lender to order their  lender condo questionaire  so they can  review and approve the complex asap .....get a  copy of the  condo documents  including the  condo resale  ceretificate to  review 

[Wale Lawal]

@Manny Apodaca

Pros and cons of not using a real estate agent.

Pro: You may be able to purchase your home cheaper if you buy a for-sale-by-owner (FSBO) property without the help of an agent. According to NAR, the average FSBO sold for nearly $24,000 less than an agent-represented property.

Con: You'll be responsible for getting all the information you need about your perfect home. You'll want to compare property values and determine the sales prices of other homes in the area. Additionally, you'll be responsible for finding properties to tour and contacting sellers to schedule walk-throughs.

Pro: You could save money on closing costs. While the prevailing argument is that the seller pays for both realtors, the sellers typically wrap the realtors' fee into the sales price of the home, so the buyer may actually pay for the realtors with their home loan. According to realtor.com, the average agent charges a 6% commission.

Con: You may need to hire a lawyer to help with paperwork. Unless you're familiar with crafting sales contracts, you may need to hire an attorney to draft a legal agreement. If the seller offers the contract, you may still want to pay an attorney to review the contract to ensure everything looks okay.

All the best!

[Robert Reynolds]

Hi Manny, 

There is no con to using an agent to buy your 1st deal. We are free to you, the buyer. THere's more con's in not using an agent, the main one being you won't have someone representing you and getting you the best deal possible. Agents are fiduciaries and market experts. 

I would not recommend using the seller's agent, because they have the seller's best interest and can never fully give you an unbiased opinion when trying to close a deal. 

Not sure why you would want a lawyer to close the deal. There is a lot of knowledge that an agent would have that a lawyer would have. An agent can help guide you through the process from showing homes, running comps, writing competitive offers, walking you through the escrow process, helping you understand the results of the inspection, and making sure you close on time. 

My advice is to get pre-approved, see what you can afford, then look for areas with solid price to rent ratios, so you can have that as an exit strategy. It won't cashflow right away, but give it a couple of years and it should. Also look for a diamond in the rough, that needs a little bit a rehab if you have the budget/time for it. That will help give you some forced appreciation. 

Condos are great point to start with because the HOA should cover the major repairs (Roof, Plumbing, Foundation, etc.) They won't appreciate as fast as a house would, but they are way better than renting in my opinion. Make sure to check HOA rules as far as renting it out after, and make sure that it's MidTerm Rental Friendly, which most HOAs are.

[Matthew Kwan]

You would need a knowledgeable lender who's also an investor as well then once you work closely with a lender then you would need an agent by your side who's knowledgeable enough to make an an offer and fight for you in terms of price negotiation. As for lender, I would recommend you use @Albert Bui as he's my primary lender and investor himself. He is located in OC, CA so close to LA right without traffic.

[Peter Mckernan]

Quote from @Manny Apodaca:

Buying a condo in Southern California as a primary home, long term, house hack, BRRR, 1ST time, investment....

1. What are possible pro/con of using/not using a real estate agent to close 1st deal? 

2. Pro/con of using seller's real estate agent instead of your own, to close 1st deal?

3. Can a real estate lawyer be enough to close 1st deal?

4. Any and All advice for a 1st time primary home investor?

Please and thank you!!!

 1. Pros working with someone that is on your team, someone that is not working for both sides of the transaction, someone who is committed to running numbers with you (listing agent might not know), someone that really knows what they are doing all around, and someone that can negotiate hard for you (these are just a few). Cons working with someone that has no idea what they are doing and cannot negotiate and has little to no experience.. cons getting hit with a ton of closing costs and or all around costs that these days you do not need to pay for as a buyer. 

2. Pros there really is none..... I have had so many people hit me up on this path as a listing agent and they want to get the property for rock bottom and out of the many homes sold, there has only been one that was listed that we were able to get the buyer in the door at an open house and sell it for a price that was not even rockbottom. There have been ones that I have sold off market, and represented both parties; however, this was something that I had connected both buyer and seller. Cons... without going into a long list... they are not working for you, they are working for you and the seller.. so good luck on getting a true negotiator for your side, this is unless it's a bad situation for the seller and you found the needle in the haystack.

3. Lawyer not sure where you are looking.. if this is CA, then you would be better off just using an agent... it would be easier to do and better for you as a buyer with the costs associated with everything to use an agent here (the one thing I would say against this is to maybe look into a probate deal on this, but still usually those are handled with agent(s)). 

4. yes, work with someone even if it's just an unlicensed investor that is a mentor that can help you walkthrough all this! Even with the knowledge that you have from books, education or anything else it is a great person to have on your side. 

[Jen Day]

Hi Manny, 

As a Los Angeles Agent, I agree with all these folks.  You're best bet is to work with an Agent, especially on your first deal. They have a duty to keep your best interests in mind, above the seller's and above their own. It's even better to work with an Agent who is also an investor and understands your long term goals. Ideally you create a good relationship with your Agent and over time you continue to work with them on every deal as you build your portfolio. It's also a plus, for example, that each time a great deal comes across my desk, I call my previous clients first, so they will get first look at something that fits their criteria before others do, and likely before it hits the market. It's an important part of building your team in a certain market. 

I own property in LA and have helped many purchase their first property.  A condo is a great way to get in the game in LA, especially as your primary residence to get the best interest rate. My first property started as a house hack and turned into a rental. I definitely learned some tricks of the trade along the way, and I'm happy to share my ups and downs. I specialize on the westside cities of Los Angeles, and prices are becoming more affordable in certain areas. I'm curious to hear about your criteria and plans for the property. Get in touch if you'd like to continue the conversation. I always make myself available for my BP friends!