Buying a Rental Property - Step 2 of 8

This is the third blog article in my series following up Brandon Turner's guide on the steps to buying a rental property.

My first article was an overview of the 8 steps Brandon outlined, and a list of some questions that a "newbie" to real estate investing might ask.

My second article was step 1 of the 8 steps which was all about getting pre-approved before searching for rental properties.

If you haven't read the above two articles, go ahead and click on the links to read them over before coming to this one. If you've already read them, you may want to read them again. Don't worry, I'll wait for you.

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Okay, now that you're back, let's continue on to step 2 of buying a rental property -- working with a real estate agent!

If you're a new real estate investor, you probably don't have much experience with working with a real estate agent. And after reading the forums, there are tons of questions that new investors have about real estate agents.

The #1 question I see being asked:

If I want to become a real estate investor, should I get a license?

There are lots of posts on this topic and quite a few blog articles as well. Those who have gotten their license almost always say YES, definitely get your license. Why? Several reasons:

a) You have direct access to the MLS and don't have to wait for someone else to be able to let you into properties you want to see.

b) You can write your own offers, and if you want to write 100 offers in one day and make a ton of crazy lowball offers to see what gets accepted, you can do that and you're not tying up someone else's time.

c) If you find someone who wants to sell their house, you can help them and get some commission money.

J Scott actually wrote a great blog article on why real estate investors should get their real estate license, which covers the above points and a lot more. Now even though J made some really compelling arguments, is getting your license necessary? NO.

As a buy and hold investor myself, I do not hold a real estate license. And yet, I've purchased 10 rental properties myself and have assisted another investor with purchasing 3. The key is to find a real estate agent who is comfortable working with investors.

Ben Leybovich (the king of counter arguments) wrote a blog article that made the case that in some situations, getting a real estate agent is not really necessary or desired. For example, if you market for off-MLS properties, or if you only do one deal a year.

So to answer this question, you have to look at your own personal situation.

How do I find an investor-friendly real estate agent?

When you're new, more than likely you're going to have to look at a lot more houses than someone who is more experienced, for several reasons:

a) So you can get a good sense of the market, what type of properties are available in the area in which you want to invest.

b) So you can get estimates for how much rehab properties will take in order to get rent-ready.

c) So when you see a house listed for $50,000, you'll know if it's a deal or a dud.

Some real estate agents might not like working with new investors because they have to put in a lot more work showing properties than someone who knows exactly what they want.

Rather than take a shot in the dark with a random Google search, the best way to find a good investor-friendly real estate agent is through a referral. How do you get a referral? Ask around to other, more experienced real estate investors. You can meet other investors at a local REIA or other networking events (such as local meet ups happening around the country coordinated through the Bigger Pockets forums), or even by sending a private message to someone local you connect with through the Bigger Pockets meet page. You will even find realtors who read this site and are active investors themselves.

If through your contacts with real estate agents, you find those who don't want to work with investors, and only retail buyers, you may want to give them a copy of Brandon Turner's guide "The Real Estate Agent's Ultimate Guide to Working with Investors". They may change their mind and thank you for it one day.

Should I work with multiple agents?

Some people say yes, some people say no. (A real estate agent who wants your business would generally say no.)

How do I know when to dump the agent I'm working with and find someone else?

Ah, this is a tough one. Generally, when someone develops a business relationship with someone, as long as it isn't horrible, we tend to keep working with that person. But if the agent isn't returning your calls, or can't answer questions about properties you want to look at, or gives you the wrong answers, or you just generally have a personality clash with that person, then it may be time to find another agent to work with.

Hopefully, if you are new, this covered a lot (if not all) the questions you might have had about finding a real estate agent to work with. If you have other questions or comments, please leave them below. And again, stay tuned for the next installment of this exciting series!