Working With An Investor Friendly Realtor To Find Deals
One of the most crucial aspects of real estate investing is building a solid team. Although all key players have a vital role in a successful investment strategy, your realtor should be among your most trusted allies.
A good real estate agent will show you where to find undervalued properties and structure deals to maximize profits. The expertise of a reliable realtor can be incredibly beneficial in a variety of ways.
All realtors have different specialties and it’s important to find someone who understands investing. You wouldn’t go to a foot doctor to complain about back pain. Trusting a realtor who doesn’t have the right kind of expertise can be just as frustrating. That’s why it’s important to vet anyone you work with and decide if they are the right person to handle your needs.
-How to Find the Right Realtor-
Identify the Opportunity:
The first step to hiring any service professional is to define the scope of work. Decide what kind of investing you’re looking to do. If you’re looking to flip houses, you’ll want to look for a realtor who understands local price points and construction costs. If you’re looking to purchase a retail outlet, you’ll need an agent with commercial experience and a good understanding of local commerce and zoning regulation.
Looking for Qualified Candidates:
Once you know what you’re looking for in a realtor, it’s time to start your search. The best place to start is your own contacts. If you know any realtors and can trust them to do a good job, it may be smart to leverage your relationship.
Don’t fall into the trap of hiring your friends because it’s easier than seeking outside help. But drawing upon existing relationships can potentially save you time and money if you have a trusted associate who could be a good candidate or could give you a solid referral. You can lean upon your existing contacts but do so cautiously.
However, finding a trustworthy candidate in your area shouldn’t be difficult if none of your contacts qualify for the job. A quick Google search will reveal qualified professionals in your area. Look for keywords that may relate to your investment business on a brokerage’s website. Or interview a variety of candidates and inquire about their knowledge of investing. Many realtors are investors themselves and those with hands-on experience in the field will be the most valuable to your business.
You could also attend local real estate events, join the NAR, post on a job board, or use computer software to identify qualified candidates. It all depends on what you’re comfortable with and the type of agent you need.
You might also benefit from leveraging online tools such as Meetup, LinkedIn, Shapr, and other similar resources that can connect you with other individuals who share similar goals.
-How a Good Realtor Can Help Your Business-
A good realtor can help you identify the value in a deal. Value can be a tricky thing to quantify in real estate transactions as there are many potential factors to consider. There are formulas you can use to calculate your expected profits. But there are so many variables at play in real estate investing, it helps to have a trained eye analyze your deals.
Be aware, the cheapest house on the market isn’t necessarily the best deal. You may find a property that seems like a steal to the naked eye but is actually overpriced. These are the scenarios where having a knowledgable realtor ally on your team can help to give you a more accurate perception of the potential deal at hand.
For instance, maybe a house is being offered for a rock bottom price but there is a tax lien on the title that becomes the obligation of the buyer. A good realtor will know how to keep an eye out for these kinds of pitfalls and steer you toward the properties that represent the best value for your money.
Increase Your Access:
A good realtor will also give you access to a wider array of properties and a deeper network of real estate professionals. Access to the MLS alone can justify the expense of paying a real estate commission. Plus, a good realtor will integrate themselves into the local community and be able to provide access to resources and personnel most people can’t leverage alone.
Calculate your ROI:
Investor friendly realtors will also have an adept sense of calculating a deal’s projected return on investment (ROI). Real estate is a simple business that is plagued by immense complexities. In theory, it’s quite easy to calculate the profit margins on a real estate deal – you simply take the expected profit and subtract the anticipated expenses. In reality, there are so many things that can influence expenses and profits that it’s quite difficult to accurately predict the outcome of a given deal.
Say you have a property that you expect to sell for $180,000. You purchased it for $125,000 and put $25,000 of work into it. In an ideal scenario, you should walk away with $30,000 in profit if all goes as planned.
But maybe your contractor slightly underestimated the scope of the work. That mistake is going to cost you an extra $10,000 and a few months of work. Perhaps that $180,000 you were expecting was what it should yield in peak buying season. But, by the time it’s finished, the weather has changed, and showings are less frequent. Then you get hit with a property tax bill that you weren’t anticipating, and you’re forced to accept a lower offer just to break even.
In this scenario, one simple miscalculation meant the difference between a handsome profit and a big waste of time. A good realtor will help you analyze all the moving parts and make sure your ducks are in a row before you make a financial commitment. They will be able to spot any red flags that may cause trouble down the road and advise you on how to avoid them.
There are so many potential challenges that a seasoned realtor who understand the local market can help you to avoid.
Ultimately success in real estate investing is determined by your level of perseverance and the strength of your professional network.
As an investor, you should look at your realtor as your co-counsel. They are likely the only ones who will be with you throughout the life of a deal - not just for an isolated portion – and they can either be your best friend or your worst enemy.
Taking the time to properly vet potential agents to find one who understands your personality and pain points can mean the difference between serious profits and serious headaches.
Building mutually beneficial alliances in the world of real estate investing can be a potent game-changer so our team at Invest Nest really encourages you to connect with as many other quality people as possible for superior results in your own investment journey.