Provided by Bigger Pockets
For a real estate investor, knowing how to find a real estate agent who is investor-friendly is the key to successful real estate investments.
Finding the right property to create rental income takes time, energy, and patience; real estate agents can do the work for you, but you must find the right one.
The downside is that not all real estate agents understand how investment properties work well enough, so you must find investor-friendly agents to ensure you make the desired profits.
Here’s how a real estate investor can find the best deals with the right real estate agent for your investment property business.
What Is an Investor-Friendly Real Estate Agent?
Read more: 5 Ways to Find an Investor-Friendly Real Estate AgentNot all real estate agents know the features investors need when purchasing rental properties. Some real estate agents work primarily with buyers looking for a primary residence.
These buyers have many different needs than real estate investors. Primary residence real estate agents focus on features primary homebuyers need for their family versus considering after-repair value, the local rental market, or renovation costs.
An investor-friendly agent understands the business side of purchasing rental properties and will help investors find properties that not only meet their budget but also help them achieve their investment goals.
You need a real estate agent with the pulse on everything real estate-related, including off-market properties, rental income, demand, renovation, the local market, and overall costs.
Finding a good rental property requires a lot of help from many professionals to make it work. It takes a village to invest in real estate.
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The Best Ways to Find Investor-Friendly Agents
You probably wonder how you can find an investor-friendly real estate agent, since they all seem to do the same thing: help people buy and sell houses.
Most real estate agents focus on primary residence purchases and sales, so it’s important to know how to find the right agent, including what to ask them and how to choose between multiple agents if you have several leads.
Here are the best ways to find the right real estate agents for a rental property investor.
1. BiggerPockets Agent Finder
If you want to skip the legwork and find an agent that suits your real estate investment needs quickly, try BiggerPockets Agent Finder.
This network of investor-friendly real estate agents helps you quickly connect with professionals who can help you find the best real estate property to build your portfolio.
BiggerPockets Agent Finder is great for new and experienced investors. It provides access to real estate agents in all real estate investment areas with expertise in fix-and-flips, rental properties, and all the necessary decisions real estate investors must make.
2. Real estate investing groups
These groups, including those on social media, can connect you with the right professionals.
Not only will you network with other investors to get ideas, but you may also network with investor-friendly agents who understand real estate investing and the nuances investors must follow.
You can find real estate investing groups online, on social media, and in your local market to meet in person.
3. Property management companies
Since property managers have firsthand experience with real estate agents, they can give you advice to determine if they’d be a good fit for your real estate business. Like any referral, do your due diligence to ensure the agent meets your needs.
4. Social media
You may not think of social media as a way to find investor-friendly agents, but word of mouth is key in the real estate industry.
You can share what you do on social media and see what connections your friends and family have that may help.
You can also join real estate-focused groups that may connect you with an agent who works with real estate investors. Sometimes, you may get connections not even through something you post, but through a post someone else makes that helps you find the right professionals.
5. Referrals
Referrals are the highest compliment any real estate agent can receive, and they can help you find the best investor-friendly agent.
You can get referrals from other real estate investment industry professionals, such as other investors, local lenders, contractors, and even friends or family.
When you receive a referral, ask fellow investors questions about the type of transaction they conducted, the experience the referral had, and any pointers they might provide to help you make the most of your transaction.
What to Look For in an Investor-Friendly Real Estate Agent
When learning how to find an investor-friendly real estate agent, it’s important to understand what qualities they should possess.
Just like when you buy a home for your primary residence, you want an agent who understands the real estate market, cash flow, rental income, and net operating income.
Here are the key characteristics to consider.
Works as a full-time agent
As of 2020, a many as 22% of agents work real estate on the side or as a part-time gig. This may work for agents helping buyers and sellers of primary residences, but real estate investors need someone much more involved in the real estate industry.
Investment properties can sell quickly, especially in a competitive market. Time is of the essence, and having a part-time real estate agent may not fit the bill because you could miss out on great rental property opportunities.
The right real estate agent will work full time and fully immerse themselves into the real estate investment property market trends to help you build your real estate portfolio.
Invests in real estate for themselves
You can’t beat firsthand knowledge of the investment property industry.
A real estate agent who owns investment properties understands the factors investors must consider when choosing properties. These factors include cash flow, rental home demand, costs, and capital gains.
Of course, working with an agent who is also a real estate investor has a downside, since they can be a competitor. When interviewing real estate agents, ask if they have real estate investments, if they are in the market to keep growing their business, and what strategies they use.
You may find an investor-friendly real estate agent who invests but with a different strategy than you, ensuring there isn’t a conflict of interest in the relationship.
Understands real estate investing terms
Real estate investing requires many more terms than a traditional real estate transaction. Homebuyers purchasing a home for their primary use don’t throw around investor lingo like cap rate, net operating income, gross rent multiplier, and internal rate of return.
Working with the right agent who understands these terms and how to use them when helping you find the right rental property is the key to successfully investing in real estate.
The last thing you want is a real estate agent who doesn’t understand these terms and sells you a property that doesn’t have investment potential.
Knows how to spot good real estate investment deals
A knowledgeable real estate agent who understands investment opportunities can look at a rental property deal and know if it’s a good fit.
They won’t look simply at the gross rent and compare it to your potential mortgage payment and deem it a good deal (or not).
Instead, they will understand all the factors in a real estate investment deal, including repairs, maintenance, capital expenditures, and vacancies.
Access to off-market properties
Traditional real estate agents focus only on MLS listings. However, there are often many more opportunities available off market.
Knowing about these properties first can allow you to find your next investment property quickly and for a better deal.
This is often the case with distressed properties.
So if you’re a fix-and-flip investor, you want someone with eyes and ears in the local market, locating properties you can buy before they become a short sale or foreclosure.
Works with (or is) a property manager
Some real estate agents are also property managers or work closely with them. This close access may give you access to more off-market listings.
Property managers have direct contact with landlords and usually are the first to know when an owner wants to sell a property.
You don’t have to use the real estate agent as your property manager if you aren’t comfortable with the conflict of interest. However, the close connection with potential real estate investments could help you make more profitable investments.
Knows the neighborhoods and communities well
A deep knowledge of the local market is crucial for successful investors. A good investor-friendly agent knows the area as a whole and has intimate knowledge of certain neighborhoods and communities.
The knowledge such agents possess can help you make more informed decisions.
For example, you’ll get to know details about things like local school districts; commuter trends; local amenities such as retail shops, churches, and other community needs; and zoning. Each of these details plays a role in your decisions when investing.
For example, if you’re buying a larger rental property, your target market is probably families with kids. This market will care greatly about school districts. If the school district isn’t highly rated, you may have more vacancies than you hoped.
Has great connections
A real estate agent with a strong understanding of the real estate market should also have connections throughout the industry.
Real estate investing requires access to many professionals, such as appraisers, contractors, real estate lawyers, lenders, title companies, and insurance agents. A real estate investment is much easier to accomplish when you have a team of experts to help you.
Finding these experts yourself can be time-consuming, and you may not always choose the best professionals. Relying on the network of an experienced real estate professional can help you achieve your real estate goals.
Responds in a timely manner
Even if you think you’ve found the perfect real estate agent for investment property purchases, they may not be a good fit if they don’t respond in a timely manner.
When talking to real estate agents, ask how they conduct their business. Do they communicate via phone, email, or another way? How often do they check in with investors?
Determine if a real estate agent contacts clients immediately upon finding a property, especially off-market properties, or if they consolidate their communications, causing you to potentially miss a good opportunity.
You can test the waters by paying attention to whether the agent returns your calls or messages within the time promised and if they have the required answers.
Also, pay attention to whether the agent always arrives on time for scheduled showings or meetings. An agent who is perpetually late likely won’t help you move forward with your business.
How to Interview a Prospective Agent for Investment Properties
Finding who you think is the best investor-friendly agent may not be the case once you dig a little deeper. The first step is reading their qualifications online or talking to other real estate professionals about them.
Next, interview them to ensure they are a good fit for your real estate investing needs. You should hear firsthand the answers to your questions, as you may have different needs or concerns than other professionals.
Here are some common questions to ask an investor-friendly agent:
- How long have you worked with real estate investors?
- What types of properties do you help real estate investors buy or sell?
- What areas do you primarily work in, and how long have you worked there?
- Do you have investment properties that you own and manage?
- Do you work with a property management company?
- Are you able to find off-market or pocket listings?
- Do you have a network of real estate professionals you work with and can refer to me when I find a property?
- Can I contact previous clients to see how the process went with them?
Best Practices in Finding Investor-Friendly Real Estate Agents
Knowing how to find an investor-friendly real estate agent is the key to successfully running a real estate business.
Even though buyers don’t pay commissions to real estate agents, the wrong information or missing an off-market deal could cost you thousands of dollars.
Before using a real estate agent for your next investment property purchase, consider finding an investor-friendly real estate agent. You can use BiggerPockets Agent Finder or local resources to help you reach your goals.
By David Crown, Chief Executive Officer, Los Angeles Property Management Group
I once knew someone who ignored a termite report, thinking the problem couldn’t really be that bad. They then had to completely reframe a four-unit building, replacing every single piece of wood in two of the units. Who was the foolish owner in that scenario? That was me. I was relatively lucky—it only ended up costing me about $50,000 to fix that quadruplex in Silverlake, but that’s still an expensive lesson, and believe me, I learned it. I’ve been in property management for three decades now, and in that time, I’ve seen the best and the worst of what this industry has to offer, ranging from impressive workmanship to a few tragic mistakes.
I’ve written about preventative maintenance before, but it’s a subject I couldn’t possibly exhaust in one article—or ten. Nor can I overstate its importance to this industry. It might be the best thing we do for rental property owners, maybe even the best case for property managers to exist at all. Preventative maintenance isn’t just about cautionary tales. You’re not just averting disaster by taking these measures; you’re shrewdly pushing your property to the highest level of its potential profits. It’s better to go out of your way to do something smart than it is to just avoid doing something dumb.
To that end, here are three preventative maintenance “hacks” that will significantly impact the “health” of your building in the long term.
Read more: Three Simple Maintenance “Hacks” to Keep Your Building Healthy
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Main Line Cleaning
This service scrubs out your main line of any debris or blockages. It will extend the life of your building’s sewer main by many, many years. It’s one of the most effective but neglected maintenance hacks out there. Don’t assume your current management has already thought to have it done—this is something to ask about. The cost of a new main line is far higher than the cost of getting a main line cleaned. This actually serves as a fairly reliable measure of capable managers. If your management company can tell you the last time they scrubbed out your main, you’re probably in good hands.
Gutter and Downspout Cleaning
Sounds stupid simple, but a lot of people never have it done. It’s crucially important to help water drain from the roof. Especially in a year like the one we’ve had, with record rainfall, it goes a long way in keeping your property safe and leak-proof. Anybody who’s ever had to deal with a mold remediation situation can attest to the importance of keeping unwanted moisture out of a rental property, and the astronomical costs that can come with failure to do so. I walked through a prospective client’s building a week ago that had three apartment units stacked on top of each other, and all of them were entirely ruined by one leak.
Strategic Hiring
The third “hack” wears boots! That’s right, it’s a team that keeps a careful calendar and performs all of the above and more maintenance actions on a regularly scheduled basis. Once, I was walking a property to inspect it when my colleague and I found a lit pilot light that was burning yellow, which meant it was emitting carbon monoxide. Thankfully we took action and immediately fixed the issue, but we might not have had the chance if we hadn’t been there in the first place conducting our inspection. So if you own apartments, I recommend hiring a management company with a dedicated maintenance team that runs on a strict schedule, visiting properties often and inspecting them thoroughly.
Sometimes, the simple fixes are the most impactful, and if you overlook them, you risk winding up in one of my many cautionary tales. But none of this is rocket science or requires cutting-edge technology. I didn’t get my Ph.D from Harvard in Property Management. (I did get my BA in English from Northridge. Go Matadors). Apply these maintenance hacks to keep your property healthy.
David Crown is the Chief Executive Officer of Los Angeles Property Management Group and has over thirty years of experience managing all types of income properties. Mr. Crown has been asked to serve as an expert witness in property management matters, and currently serves on the Forbes Real Estate Council. He can be reached directly at (323) 433-5254.