In today’s blog, we will discuss one of the professionals you need in your team. One of the most important, as you will be interacting with them most the realtor. As a real estate investor, one of the best allies and friends that you can have is a realtor. When I started my career as a real estate investor, I quickly discovered that a good realtor needs to possess certain qualities that will help you find the cash-flowing properties and the ones that will be the right flips. Check out my Youtube channel for a presentation on questions. I suggest that you should ask a realtor. When you’re starting to research and analyze areas, your best ally will always be a realtor, but not any realtor will do, so your job is to sift through them all until you find one willing to work with you and help you achieve your goals. In the Toronto area where I live, we have so many Realtors. I bet there is a different one for every house sold. Many are part-time, with very few doing it full-time. I don’t know why there are so many realtors here. It is imperative to choose a good realtor, and I will suggest what skills a good realtor should possess and the questions you need to ask to start finding the right one for you.
The first thing you want to find out is their area knowledge. You want a realtor who helps you decide on the area, especially if you are new to the locality. The area knowledge you wish to obtain from a realtor is essential. A realtor knows about upcoming development projects, any ordinance changes, and the amenities and attractions in the area. They need to be familiar with the area’s major employers, local schools, the trending shopping and dining areas and public transportation links. They can also help identify sub-markets and smaller areas within your local market that may include the next up-and-coming neighborhood likely to pop up for investors by researching the communities in the market that allow for short-term rentals with the highest rent-to-value ratio. This is very important because sometimes I have received tips from Realtors regarding upcoming new areas. This is one of the reasons why I decided to start investing in the east side of Cleveland. Many investors advised me never to invest in the East, but one day I started talking to a realtor who disagreed and said there are many promising areas in the East that I can show you. I then looked more into it and discovered many places perfect for investing. So that’s why you want a realtor to help you decide, especially if you don’t know the area.
A realtor should also possess a keen eye for spotting a good deal. This will allow them to show you similar properties, ones with a much better cap rate than another, and this is very important because they can give you some tips about the area, maybe the taxes and rates are more expensive, things that you won’t know. Nothing is more frustrating than an agent who sends a deal or a property that doesn’t make sense; it’s a waste of time. You need them to use the same language you use; they have to be looking for that. The realtor who works with investors may take the time to do basic research on the property. For example, in buying and hold properties, the realtor will estimate the cash flow and cash on cash return of the deal before presenting it. They can advise on rental incomes, giving you an idea if that property is going to work for you or not. The more relevant information you can get from a realtor will save you lots of time and effort.
Next, they can help you with the ARV or the after-repair value. This is important when doing fix and flips because you don’t want to go into an area and think that you’re buying at a discounted price and then not being able to sell for a profit. If you’re new to the area, an experienced realtor’s advice will help you decide on the ARV cost. Some areas are so granular that you want to have an expert eye to advise you. This will give you an edge when you’re buying a property because if some people think an area is not that good and don’t invest, this allows you to sell that property for a lot more. That is the little edge; specific neighborhoods are always gentrifying, and the ARV is very different. As everything is being renovated in the same area, the property will naturally rise in value when you finish your fix and flip. This happened in one of my properties in a relatively new area. It was just a little outside of where I used to buy, so I wasn’t aware there was a little bit more of a suburb attached to it, which ended up good for me. When the realtor suggested a price, I thought I didn’t know I could sell it for that much, but I took his advice and went ahead with the sale. We got the money he suggested, and I was like, wow, this is great. I wouldn’t have valued it as much as he did. But we got it. So that’s an example of the value you can get from a good realtor. If your realtor is an investor and has been in the business for a while, he will be a source of reliable connections that can help make property transactions easier. They can connect you with specific accountants and lawyers to advise on dealings, what kind of title company to use, etc.
The next important thing a realtor should have is the ability to find off-market properties. Only good realtors can do this. So a realtor that is a go-getter will have several routes to market. Some have a way of getting in touch with people in financial difficulties and are willing to sell their property without listing it. They are called pocket listings, and you will be aware of the opportunity before any other buyer does. This is how you can get even better deals. You want your realtor to know you can work out something with them before it goes into the MLS. To give you a little idea of what it will take to repair the property, especially if they know how to estimate the repairs. The last realtor I worked with came in before we even started renovations and suggested good ideas like opening up this wall will make the kitchen look bigger, even to the point that he suggested specific colors in the bathroom and so on. So it’s a good idea to have somebody look at the property before making repairs. As I said before, as soon as you acquire the property, no matter what condition it is or how long it will take you to repair, contact your realtor immediately to find out what the ARV number. They could give you some ideas for what is popular in the area, what people are looking for, and what factors sell houses the most. When you start meeting realtors, you will use your superpowers, such as communication skills. You will have to kiss many frogs before finding the ideal realtor, that’s for sure. So here are some of the questions you can use to get started.
Of course, you can add questions to this list, but these are some of the most important things that you want to ask a realtor you want to work with.
The first one is, are you an investor? That is the number one thing I look for with a realtor, to know if they are investors. They will look at the property like an investor does if they are. A realtor who deals only with the final user of the property is just a salesperson and will not give you the insights you need when looking for properties.
The next question is, how long have you been in business? You want to know that they have been working in the area for at least two to three years, and if they have been in business for that long, they will have a little bit of experience. Also, see what their willingness to work with you is.
The next one is how many clients are you currently working with? If an agent is working with 20 people, you will know that’s not ideal as their time will be divided. They might have some delay in answering your messages and questions as well.
The next one is, are your clients primarily buyers or sellers? This is important because if you have somebody specializing in working with buyers, they might not be the right person. You may end up working with two realtors, one that sends you leads that can help you acquire properties and another that is good at marketing but can’t go out there and sell your property fast. The last realtor I got was fantastic; he sold my properties fast, closing the sale before I finished the renovation.
The next question is, do you work alone or with a team? This is important because if they are on their own, you will share their time with other clients. However, if they have a team and you cannot reach them, there’s always a way to find the answer you’re looking for.
And the last one is usually pretty standard, but you want to agree on their commission and contract terms. When you’re an investor, you don’t want a contract for the long term with a specific realtor, that is only when selling properties. When I am dealing with new realtors, I am very clear from the beginning that if they bring me a property that I’m interested in buying, they are going to get a commission as I am not exclusive when I am buying properties; For the Sale of a property that I am currently renovating, I’m not going to be signing any long-term contracts when I am selling this property, I usually give them a month, if you do have that option, then you can turn around and take the property if it is not selling for whatever reason, you can always go back and get another agent to work with you. Some agents want to sign six months to year contracts, so if they cannot sell your property quickly, you’re stuck with them for the whole term. You will do this when you start working with new realtors as you don’t fully know how they work, when you get the right realtor then you will funnel everything to them.
That is it for realtors, please let me know if you have additional questions when you are interviewing agents… tune in for more in the next blog.
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