Let\u2019s face it — there are a million and one ways to invest in real estate. The method that I\u2019d like to focus on today is the strategy where\u00a0you are purchasing a property with your own money with the intention of renting it out. It\u2019s not everyone\u2019s strategy, but it is a traditional way to \u201cget in the game,\u201d if you will.<\/p>\n
In this instance, you\u2019re going to be putting a 25% down payment on the property (let\u2019s say it\u2019s a single family residence for the sake of argument), and you\u2019re going to acquire a property that\u2019s already listed for sale on the local MLS by another real estate broker.<\/p>\n
Do you remember when you were growing up and going to school? Like all the way back in first\u00a0or second\u00a0grade? You and your friends probably debated the question, \u201cWhich came first, the chicken or the egg?\u201d Maybe you even debated it with your teacher or your parents\u2026 who knows!<\/p>\n
In real estate investment, that question translates to, \u201cWhich comes first, a lender or a real estate agent?\u201d<\/p>\n
I\u2019m pretty sure that this is debated constantly in the residential real estate arena because that\u2019s where my expertise lies. (I\u2019m not sure about commercial real estate, but I would assume similar results!)<\/p>\n
It\u2019s a very healthy debate, and both agents and lenders will definitely have their sides of the story as to which person you should contact first. Should you contact the real estate agent and have them find you a lender? Or should you find a lender and have them find you a real estate agent?<\/p>\n
Related:<\/strong> Confessions of an Ex-Banker: How to Get Your Next Loan Approved, Guaranteed.<\/a> My opinion is slightly biased in this instance, but let me give you my perspective, and you tell me if you agree with it.<\/p>\n I think you should contact and be in touch with a lender before<\/strong> you even go out and find a real estate agent.<\/em><\/p>\n The first most obvious reason to go to a lender before you go to a Realtor is to get pre-approved. In today\u2019s sophisticated real estate market, it makes absolutely no sense to go out looking for property without knowing what your maximum purchase price is. A good lender will be able to customize your pre-approval letter to each and every offer you submit on a property. Remember, a pre-approval is expected<\/em> in today\u2019s market. Be proactive and learn how to get a mortgage preapproval<\/a>, its easy and painless.<\/p>\n Besides, most top real estate agents are too busy to waste time driving around and showing property with \u201ctire kickers.\u201d You know, those folks that are just window shopping? The top agents focus on money-generating activities because they are the ones doing the deals and getting it done. Imagine how much time a good agent would waste if you didn\u2019t get pre-approved to buy a property because you had a derogatory credit or something like that? The answer is: a lot!<\/p>\n The second reason is that an established lender will be able to point you in the direction of a good real estate agent. (The agents that are actually out doing deals constantly.) Think about this reason for a second. When a lender provides you a referral for a real estate agent, it\u2019s usually someone they know, like, and trust. And quite honestly, it\u2019s probably someone they\u2019ve conducted business with in the past. They know how the other person works, what to expect as far as communication, and just downright have a good gauge as to what to expect from the referred real estate agent.<\/p>\n I can tell you from personal experience that when a client wants to use their friend who\u2019s a Realtor, the results aren\u2019t always up to par. It really doesn\u2019t take much to get your real estate license these days. That\u2019s not to say that it hasn\u2019t worked well in the past because it has. It\u2019s just saying that the percentage of success is smaller.<\/p>\n
\n<\/em><\/p>\nHere’s Why<\/h2>\n
Finding a Good Agent<\/h2>\n