I have been reading articles, listening to podcasts, and attending webinars for what seems like forever. I feel I have identified my niche and strategy (buy and hold SFH using BRRR), I've mapped out a plan (secure private money then cash out refinance) , I've analyzed deals, and I'm eager to take action. I've tried to reach out to another investor (hoping he can become my mentor one day), a real estate agent, a banker, and a mortgage broker in hopes of making a connection, furthering my education, and potentially building a network. I've only received one cold shoulder, but the others suggested I get in touch with them in a few weeks or months. The agent suggested I contact him after I've been pre-approved, hinting that I'm not serious enough. The investor suggested I get hooked up with an agent and start analyzing deals. What say you?
I don't plan to use traditional lending for my first deal, but maybe the right bank will have an option I could use. I feel like the people I've talked to that I personally know have directed me to contact someone else. Am I looking in the wrong places? Do I not have my ducks in a row yet? Help my out Bigger Pockets.
Can you get some sort of pre-approval from the investor. Some sort of letter stating that they would consider private lending financing you for deals up to $XXX,000 based on analysis of the property?
The real estate agent is likely going to want to know you have SOME way of closing or wholesaling a deal before showing you properties. Right now it sounds like you have nothing to show the realtor to give them any comfort that you aren't wasting their time.
I think you have a valid point about the agent. I was hoping he could at least help me get started with some online listings with the parameters I'm looking at. But I see why he wouldn't see me as a serious investor right now.
Maybe I used the wrong terminology or didn't clarify, but the investor I was speaking about invests in real estate himself. I was turning to him more for guidance and education than financing. I'm hoping to start with some friends and family to invest. But would it be beneficial to get pre-approval from a bank to show the agent, even if I don't plan to use it to fund a deal? Or would that damage a potential relationship with the bank?
Originally posted by @Sean Daugherty :
But would it be beneficial to get pre-approval from a bank to show the agent, even if I don't plan to use it to fund a deal? Or would that damage a potential relationship with the bank?
I have the same question to ask, and I would add: would it be really worth it considering the it might ruin the credit score?
A single credit check for pre approval on a potential mortgage should have very little impact on your credit score, maybe a few points. Also credit checks drop off your score in 12 months.
Even if you don't use the pre approval to fund the deal, it still isn't a bad idea to have one. Developing a relationship with a loan officer is going to be one of the team members you want on your real estate investment team, and meeting with one to talk real estate investing and, if that seems to start off decently, get a pre approval is a great way to start to develop that relationship, even if ultimately you don't go through them for your first purchase.
@Sean Daugherty Congrats on taking the plunge--Don't be discouraged by the nos and the not yets. They are the groundwork for a killer story when you finally make it! What is your plan to secure the private money? Where are you looking for your properties--MLS or off market deals? With regard to sourcing a mentor I've heard of guys locally reaching out a fellow investor like you have and offering to help them for free with labor items like mowing grass, cleaning out a property, etc in exchange for help getting your business into its 1st deal.
@Ray Masciangelo Currently I've just been looking for properties on Trulia, Zillow and Realtor.com. I've driven by several places I'd like contact the owner about (looks sort of neglected and definitely the shabbiest house on the block), but I don't know the best way of going about it. That's where I was hoping to utilize an agent or a potential mentor.
As for financing I have a family member who has mentioned in the past he and some of his business partners would be interested in investing in real estate. They don't have the time, but they have the money. I plan to analyze some deals and use the deal analysis tool on BP to present some sheets to him. I plan to go this route because I don't feel I have an adequate amount saved up for a down payment.
Would analyzing deals for a potential mentor (wholesaling to a lesser degree, I suppose) be a plausible in-road?
Congrats on getting ready to take your next step! As a Realtor, I wanted to comment on that side a little for you. Don't take it personally if he's wanting you to have a little more solid funding in place. I'd say if 1 in 20 people who contact me that want to purchase something actually follow through, I'd be fortunate. There are a tremendous amount of people convinced they can make easy money and get a steal that they shampoo the carpets, mow the lawn and make an easy $25,000. Most agents have a filter and flags that help them know when someone is serious or ready. It's never 100% accurate though.
The clients that I have the best relationship with, and the ones that pop into my head when I see a great deal are the ones that understand we are a team and don't just leave me with a broad range that I would spend days sifting through or even worse "I'm just looking for good investment deals."
What you want to be to that agent is the guy in his head that knows what he wants, how he's going to fund it, what he's going to do with it. If I know I have someone who has been looking through the MLS, trims things down to 5 legitimate options (instead of asking me to show them 25 different properties), none of those may fit, but I'm probably more interested in getting to know you and seeing how you react to what we look at so I know the right ones for you as they come up later. Your agent should love working with you and get a rush out of finding you properties to help you accomplish your financial goals. Just remember that they want to be a part of your team, but that doesn't mean they should be doing all the work. Lazy, unmotivated buyers get fired all the time by agents.
For lenders, I strongly encourage you to be talking with smaller banks and especially Credit Unions. Look for someone that has a younger loan officer that has a couple years experience to be competent, but still eager to get your business that may take a little extra work.
@Matt Lowery Thanks for your perspective. I truly want some to work with me not for me. I can only imagine how many people contact you on a regular basis hoping to get rich quick. I know it's going to take me many properties and many years to reach the level of wealth I strive for, so I do not want to give the impression that I think I'm going to be a millionaire with one property. I will get a few more ducks lined up so that when I contact the agent again he will see me as a serious investor. Thanks again Matt.
@Sean Daugherty Are you wanting to buy in the Akron area, or somewhere else? I can look for a new agent for you to work with that is more service minded than what you may have encountered so far.
Hello Matt, I am thankful for reading your comment. It is a great feeling to know that I am taking the right steps in managing my relationships with REALTORS.
Aside from the great insight you provided, what other insights would you have for investors looking to build solid, trusting, and mutually beneficial relationships with REALTORS?
Hello Matt, I am thankful for reading your comment. It is a great feeling to know that I am taking the right steps in managing my relationships with REALTORS. Aside from the great insight you provided, what other insights would you have for investors looking to build solid, trusting, and mutually beneficial relationships with REALTORS?
@Sean Daugherty it might be an in-road, however, most of them probably have their systems in place and refined to what works best in their business. I would circle back to the family member/business partners and confirm the interest and approximate availability of funds. In agreement with what @Matt Lowery said many investors do have a bad rep about not being conscientious of a realtor's time. When we got started we went onto redfin and literally set a saved search (with our specific investing criteria)for all single family homes in every zip code of the counties we invest in. Probably a little overkill as it sends a ton of properties to our e-mail, however, it forced us to look at and pre-screen them and the neighborhoods they are in. Once we found a batch of places we wanted to see we sent the addresses to our realtor to schedule us to see them. We also give our realtor all of the after-repaired homes to list so it balances the low commission they got from the buy side. Our first several deals we actually ended up doing a JV with a local family friend. We located the property, ran the reno estimates, ran the comps/ARV and ran the entire project from start to finish. He brought the money and when it sold profit was divvied up.
@Matt Lowery I am interested in investing in areas around Akron (Kent, Brimfield, Mogadore, Cuyahoga Falls, Stow, Tallmadge, Ellet). I'm not as knowledgeable about Akron neighborhoods and not sure I'm ready to take on some of the challenges. I'd appreciate any connections I can make.
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