Relationships to build 1st?

Question

What do you believe is the most important relationships to develop first and perhaps in chronological order in order to begin investing.

For example, do you believe it is best to go to a mortgage broker first, or a contractor, or maybe a buyers agent, title company maybe etc. ? What is your opinion on who to approach first?

I began questioning this when I was out all day going to every brokers office in town seeking realtors who could use an assistant (so that I could access the MLS) but questioned what I could REALLY provide them other than being an assistant.

To give you perspective on capital saved, I have $16k total. I am open to flips and multifamily rentals curently

Andrew Johnson · Answer

@Jose Falconett I think I'd focus on building capital first.  Try to figure out what your budget needs to be:  personal emergency fund, reserves for the property, down payment, closing costs, etc. and use that to back-in to what you think you'll reasonably be able to afford.  Saved money is usually very different from investable capital.  Once you understand what you can afford I think that's the time to have more meaningful conversations with agents, mortgage bankers, etc.  Case and point, most of the big "national" banks don't touch mortgages under a certain threshold (maybe $75Kish).  So you can wipe them off of your relationship list if you're looking to buy a $55K fixer.  You'll need to get into a contact with a community bank for that (more often than not) and understand what their requirements are.  Not to mention that price-point may impact your choice as (with any luck) you'll find someone that lives, eats, and breathes that market.  This is a very roundabout way of saying that your goals will help to define who you should be connecting with (regardless or order).  If you can't effectively communicate your parameters it will be hard for those service providers to truly be a resource and partner for you.

Ralph R. · Answer

@Jose Falconett

@Dave Van Horn  is spot on.  It takes time to build a network of people.  Find other investors and talk with them.  Its like being the new kid in school.  He's all alone the first day and knows everything about everybody before he graduates.  Trust your gut as much as your head about what they are telling you.

Heres my list of priority's.

1) Get to know your finances.  You need to know where every penny goes and more importantly WHY it goes there.  When you are investing you will always be putting money together for something.  Down Payments, renovations, Reserves and so forth.  Figure out a budget and stick to it!  As your business snowballs it becomes second nature and soon you can accumulate large sums pretty fast.

2) Bank, lender, Credit union etc.  These are the people who you will need to borrow money from, and where you will have checking accts and so forth.  How do you know how much money you need for a down payment unless you know what type of loan or loan product they have, and how much down you need for that product?  Usually the checking acct will be where you get the loan if its a bank or credit union.  Most likely you will deal with these people a long time.  Choose carefully!

3) I like to know the PM early on.  They know what size house is the best rental in their area.  They will be invaluable when you buy when you have questions about rent ability, and potential rents.  Sometimes I make the offer based on their recommendations.  They always tour the property for/with me during due diligence.  In one of my areas a 2/1 rents for 775 while a 3/1 gets 1075.  Its pretty typical for the 3/1 to be higher priced but that's an unusually high spread compared to the surrounding towns. PM's know agents that are investor friendly, sometimes they know of houses that are for sale but not on the MLS.  You (hopefully) are going to deal with that PM for the duration of the time you have that property.  They have the keys to the car and are managing your money, and investment.  They can make or break you.

3) Realtor recommended by PM (another reason to thoroughly vet the PM) but you need to check out several.  You will deal with these people only through initial search and  the purchase.  Sometimes I get lucky and find the right one on the first purchase and sometimes I buy using one once and move to the next.  Many realtors are not experienced investors, so trust but verify what they tell you.  If they say something will rent for a price ASK THE PM!  Most are not aware of all your expenses as well.  Always get your own numbers and figure your own CF, and other numbers.  When I find a good one that I can work with I keep using them.  Start networking with the ones the PM recommended then change if you want but be ethical about it.  Talk to several realtors meet them etc.  BUT If you talk to a realtor about specific property then stick it out with him/her.  DON'T waste their time!

I don't have nor do I want access to the MLS. (I have never purchased off the MLS)  I find my properties through the realtor, and the PM.  I check Realtor.com often and soon I can give you an idea of the asking prices in an area, and the sales.  Then I know if I'm looking at a deal or not.  If you look often enough you get a feel for what is happening in an area and what stuff is worth.  Coupled with analyzing lots and lots of properties you create your "knowledge base" for an area. This system works for me, all my properties are out of state and at present I have 2 properties I've never seen.  The realtor and PM's have seen them. All I ever see are the checks and I like it that way!!!RR

Dave Van Horn · Answer

I would build relationships with other Real Estate investors at your local REIAs and Real Estate Meetups. Then the rest of the pieces fall into place since you have access to their networks.

Best,

Dave

Relationships to build 1st?

Most Popular Reply