Trouble for you, JakeRodgers, and drome8, is you haven’t found a capable and truly professional REALTOR. :help
Realtors do not cost the Buyer money, they make the Buyer money. Not all of the time, but certainly most of the time. Where? In calculating the likely ARV range, for today’s market AND in helping to calculate true costs of rehab. Of course, most would like to make a sale, and you must always keep that in mind. Investors and REALTORS who work well together will become a synergistic, money-making machine.
A good RE attorney, a whole host of quality contractors who work at reasonable rates, and an outstanding Investor Realtor – these are the tools of the trade. Also, some of the best REO’s are FHA Repo’s. Only a broker can submit the bid. If you’re not bidding on HUD-owned properties, you’re missing out on a huge pool of what tends to be great rehab inventory.
As for finding motivated sellers, it always cracks me up when Investors work so hard to uncover their own “motivated sellers”; on CraigsList, through WOM, the newspaper, bandit signs, REIA meetings, etc. when the most motivated sellers in the world are right under their nose, in the MLS! You see them as you drive by the signs in the yards, “Look at me! I’m a motivated seller!”. Think about it – who is more motivated, a FSBO seller or a seller who has committed to hiring a broker?
Folks who have listed their property for sale, with a professional, are so motivated to get their property sold that they are willing to pay a small portion (5-7%) of the final sale price out as a commission, to get the job done. Now, are 20-80% of these a bit overpriced? Sure. But that is where the professional investor brings his/her acumen into the equation, in understanding what it’s going to take to rehab a house.
Of course, there are always those stories about how some RE agent screwed the investor; made them buy something they didn’t really want, at an exorbitant price. It happens. That’s why you have to spend time digging until you find an outstanding RE Investor’s agent. And please, when you find one, be smart enough to not tell him how it is. Talk about your specific needs, sure, yet if you’re working with someone who appears stupid about what you’re doing, move onto the next agent. An outstanding RE Investor’s agent should be someone worth listening to.
You don’t go into your Doctor or Attorney’s office and tell them how to fix your problem, do you? And, if you’re able to do that with your Realtor, you haven’t found a pro yet. Keep digging!
It’s a two-way conversation, for sure, and I learn something from every Investor client with whom I work. But think of this – if the agent has worked with 10’s if not 100’s of RE investor clients over the years, do ya think maybe they bring something of value to the table?
As the investor, it’s your responsibility to become a great poker player, to hold your cards close to your chest, especially when it comes to calculating your MAO. :bobble
So this notion that something has to be on the market for 6 months before it’s finally “investor grade inventory” is hogwash; pure hogwash. :flush
The savvy rehab investor knows that many times, a new REO property could make a much better investment than something that’s been picked over for 6 months, that every investor in town has seen and said, “Pass”. It’s the most ludicrous notion, and I hear it often, mostly from newbies who’ve been to a couple of multi-thousand dollar training courses and hung out with a “mentor/coach” for three days and suddenly, they think they’ve learned more than the REALTOR who’s been in the trenches for years and years, worked on 100’s of real world transactions, maybe done a lot of investing himself/herself, all in his/her specific part of the world.
It cracks me up how newbies are willing to pay some out-of-town expert to fly-in with a brief case, spend a couple of days with the “client” (note: this is AFTER they’ve shelled out thousands for the privilege); They will have their undivided attention, yet they’ll go through lots of properties make ridiculous offers and get nothing bought; then the guru gets back on the plane, saying, “Good luck. Keep doing what you’re doing. You’re gonna get rich! And for heaven’s sake, stay away from those crooked REALTORS”. Oh, and by the way, that advice just cost you 3-5K, or whatever.
Here’s a bit of FREE advice – not for you, Jake, as you probably ARE savvy enough to not need an agent, but for those who are just starting out. Call your local REIA. Ask them, “Who are the top three to five investor agents in the City?” Interview them and make a decision that you’ll work with anyone who brings you a deal, and you’ll be loyal – on THAT specific property.
Before you get started, however, have your proof of funds letter ready, or know how you’re going to get the cash. The best deals are cash deals, and if you don’t have that part behind you, it’s probably best not to get started.
Fortunately, a few really top notch REALTORS, like me :beer will show you property, because every client has potential and contacts. They know that one day, if the desire is strong, you’ll figure that part out and be back, and during that time, they’ll refer all their friends to you. That REALTOR will never have to go begging for clients. They will come to him/her in droves.
It takes a while, but trust me on this one. A good REALTOR is well worth his/her paltry 2.5 - 3.5% and that’s why their client list just keeps growing, and growing, and growing …
