I'm looking for income producing properties ?

18 Replies

You don't mention what type of income producing property or budget you have to work with, so I'll assume residential rental as opposed to commercial leasing.

So, my suggestion is to work with a Real Estate Professional in the area you are considering buying.

You typically don't pay for their services as they are paid from the sellers proceeds. This works very well for investors. You may however, be required to sign a buyers contract. After all, they don't want to spend time finding you an investment and have you turn around and buy it from someone else :(

A Real Estate Professional in the area you are considering can assist you with the following:

Find properties in your price range - They can help you find REO's, Foreclosures as well as listed properties.
Investment Strategy Information - When a real estate agent knows your investment strategy, they can offer alternatives and may even direct you to an investment that you haven't considered.
Financing - Real Estate agents can assist you with obtaining financing. If you require lender financing, most agents know preferred lenders who offer the best rates on your type of investment.

The real trick IMO, is to find the right agent!

I suggest you speak with several before making a decision to work with a particular one. Some agents will welcome new investors/buyers and some won't, some will offer good information from their research some will give you 'gossip'. Some will work diligently for you, some will work only when you call.

Using a Real Estate Agent, is an important step and unless you are qualified to find the properties, negotiate the sale and financing on your own you are faced with difficult decisions that you may not be prepared to make.

I hope this helps, and good luck.

Hi,

You bring up some good points and I believe networking in the real estate business is very important but shouldn't you rely on yourself to find good deals ? Are you a real estate agent ?

Originally posted by "SteveGent":
Hi,

You bring up some good points and I believe networking in the real estate business is very important but shouldn't you rely on yourself to find good deals ? Are you a real estate agent ?

Yes, I am a Real Estate agent (websit in my sig).

Relying on yourself is always the number one consideration in any situation, don't you agree?

However, to make the best informed decision possible, wouldn't you agree that using professional tools and knowledge will help you make the best possbile decision?

I realize many investors (specially new investors) don't like to work with RE Agents for various reasons. But I believe firmly as a RE Agent our job is to make investors money. It's what we do. Our integrity and business ethics require us to do this. Now granted, not all RE Agents are alike or think this way, but the majority do! We're not all greed mongers you know :lol:

Having a RE Agent who will work for you will help you make the most informed decision you can about a given property. As a RE Agent, we have access to information the public normally does not have access to.

Example: As an investor, when was the last time you contributed to a planning and zoning meeting or discussion on future zoning needs for a community? While the public in general may sit in on planning and zoning meetings when they are publisized, they are typically not asked to chair a seat on a zoning commission. RE Agents do this all the time.

Where better to find first hand information regarding changes to zoning, city sewage/water issues, large scale building permits, traffic counts and analysis then someone who regularly attends these meetings?

If my investors don't make money, there's no incentive for them to come back to me. If they don't come back, I won't make any money.

It's a business strategy I am suggesting.

Thanks for the reply :D

I would love to work with real estate agents but in this market everyone is a real estate agent and I'm finding out that a lot of real estate agents don't know anything about real estate.

Example: As an investor, when was the last time you contributed to a planning and zoning meeting or discussion on future zoning needs for a community? While the public in general may sit in on planning and zoning meetings when they are publisized, they are typically not asked to chair a seat on a zoning commission. RE Agents do this all the time.

This sounds like a good idea but isn't that a conflict of interest ? That would be like having used car dealers make there own rules when it comes to inspecting cars that they sell.

I understand your pain: "everone is a real estate agent" :)

In actuallity, there are good agents as well as not so good.

Finding a good agent is the task at hand. To do so, I suggest using the tried and true method of interviewing.

Going to an office and speaking with the Brokers or Office managers can tell you alot about the agents that work for them.

You can also ask other investors in your area to recommend someone. Referrals are the life blood of agents and if an agent is referred chances are they got the referral based on experience and expertise.

When I first started investing in real estate and prior to being a Real Estate agent a method I used was to 'test' them. What I did was this: Once I had my financing arranged, I would phone 3 offices and ask to speak to an agent. Once I spoke with them I gave them my criteria for purchase. I let them ask their questions, answered them and then stood back for one week and waited.

If I did not hear back from anyone, I moved on to 3 more agencies.
Realize that hearing back from them also included a phone call from them saying they haven't found anything yet. That was important to me. I wanted to know that they were still looking and hadn't pushed me aside as a non-buyer.

After several attempts, I found an agent who was willing to work 'for' me. With this agent, I was not only able to purchase the property, but also able to find other properties that fit my criteria. I wound up purchasing 5 properties from one agent, all because they were willing to help me find what I was looking for and helped me to understand investments.

This sounds like a good idea but isn't that a conflict of interest ? That would be like having used car dealers make there own rules when it comes to inspecting cars that they sell.

Acutally, it's not a conflict of interest at all.

Think about this for a moment:

You have a project that involves community growth and expansion. Who better to bring to the team than someone who deals with the publics real estate needs on a daily basis? If it were a conflict of interest, the real estate agent would have a direct relationship that would benefit from the project (which does sometime happen). But typically, what is being considered is 'How does this effect land values', 'How will traffic counts increase and can they be managed effectively' and so on.

Real Estate agents do far more than just sell real estate. They get involved in the community in many ways:

When taxes are levied and there is public outcry, it is Real Estate Agents that stand on the publics side to try and have them changed. Real estate agents know full well that if the public is outraged because property taxes are a problem, buyers will stop buying. That's not good business for the agent.

If you get the chance, you might want to read a bit about what the National Association of Realtors is doing to help ease tax burdens for home owners, to assist home owners obtaining affordable home insurance, levying with politicians to bring tax reform and property amendments to many areas of the country.

I hope this helps you. I don't know what area of the country you are in, but if you need assistance finding a qualified agent who is interested in working with you I'd be happy to help you. As a Century 21 Agent I have access to over 7000 offices world wide.

I do believe that you get what you pay for. With that said, I have been thinking about talking some re agent's in my area. My question is what would make an agent very interested in my well being? My thought's are, if the going rates is 5% to 7%, I will offer 10%. But for my 10% I would ask for some insurances. What do I mean by that? I mean if the going rate is 7% (I think that is what is) then I will give them another 3% on top of there 7% they got on the sale, from the seller. And if I don't make any money on the deal. Then I will pay them 4% on the sale, when I sell the property, if I do make money then I will pay the full 7%. So, everything said and done they can make upward's of 17%, that is if I make money, if I don't make money, then I'm only paying the going rate. (7% from the sale to me, +3% and the sale from my sale of 4%, would be a total of 14%, the normal commition) I'm thinking that is generous, because I fell that the re agent should lose too, maybe if I only pay only 2% at the sale of my property. That way we both have something to lose, if the re agent is a sleep at the wheel, and doesn't do there home work. my feeling on this is if I lose they're not going to try to sell the propery knowing there is only 2% in it for them. If I did the first option where they could get 17% and the worst thing that will happen to them is a normal sale of 14%, then I would tell them that if I lose, then you lose my business.

As a real estate agent, I can tell you this (I don't know what area you are from and am only familiar with Fl laws pertaining to commissions and the like) but...

Originally posted by "Prowler1":
I do believe that you get what you pay for. With that said, I have been thinking about talking some re agent's in my area. My question is what would make an agent very interested in my well being?

What makes a real estate interested in your well being are the following:
Referrals - Good news travels at the speed of a snail, bad news travels at the speed of light!
Repeat Business - If you are happy with your investment, you will be more inclined to use the same real estate agent for other purchases.

As for the commission, there is no standard (not supposed to be anyway). They are what they are.

A good agent will show you properties no matter the commission because we live and breath by referrals. What we don't make on one, we hope to get a referral to make a bit more. Actually, an agent really shouldn't be telling you what the commission rate is on a listing.

The bottom line here is YOU the customer! If an agents helps you make a good purchase, you're going to use them again.

Although I personally would welcome the extra commissions you describe, I don't think they are necessary.

If you as an investor make money, then I as the agent will make money.

My 2 cents worth.

Thanks, Jessiesc that is what I'm looking for. Say, when a property comes out on the market, a devorce couple, BAD DEVORCE, they just want it sold, and they want it sold tomorrow, you explain to them if you want it sold tomorrow, well I will need to list it at 60% of the value. They say I don't care I just want XXXX out of my life. so, sell it at 60% I just want it done. This is agreed upon by both man and wife. The big question is how do YOU call. AND WHY, because they only pay you the standard commision?

Originally posted by "Prowler1":
The big question is how do YOU call.

Do you mean 'who' or 'how'?

I assume you mean who so I will go from there.

Each agent is different in how they market a property. For instance since I focus on Commercial real estate and I use the following methods:
Heavy Internet exposure - 10 websites plus possible a unqiue website for the property
Signage
Newspaper advertising for the first month
Email campaign

My wife however, specializes in residential and she uses the following:
Internet exposure - 3 websites
Signage
Newspaper advertising for the first month
Magazine Advertising for the first month
Email campaign
Calling her clients.

As for who - we contact anyone we have who is looking for this type of property.

The commission really doesn't matter, what matters is getting the house sold. Remember - Referrals and repeat business.

The divorce may produce 2 clients, husband and wife and I want them both.

Hope this helps.

So you don't have any client's that you call first if something come up that sounds like a great deal, to see if they want to jump on it, because you know they have the resources?
If that client say's YES I want it, then you don't have to advertise, (lowering your cost) If he say's no then you start your normal process.

Jessie, can you clarify something for someone who is in the process of putting a team together? Are you suggesting I engage or develop a relationship with a buyer's agent on deals or to bring me deals s/he discovers or are you suggesting developing relationships with seller's agents to let you know when they have something for sale that might be of interest? As I type this, I'm guessing your answer is going to be "both." :D

I think any "anti" agent sentiment you might be getting is because a lot of what us newbies hear is advice of how to do things yourself (such as find deals) which implies to us that we should avoid realtors and find the deals ourselves.

Thanks for your input.

Jessie, you really bring some sound advice in the area of real estate marketing.. your experience/wisdom is genuine.. I just started with investement properties, I am here in the Atlanta, Ga area, I have some agents that I am looking to put on my team.. If you have any century21 agents, please refer them to me..

I am also a Loan Officer, I specialize or niche in sub-prime financing.. which is one step above hard money, but one step below conforming or A-paper lending(perfect Credit).
example: we can get investor loans funded with as low as a mid 500 fico..

now if your strategy is to flip houses, then subprime financing is not for you.. stick with hard money.. however if your strategy is to have income or rental properties, then subprime finacing will benefit you especially those holding their properties to gain long term equity. average rates are between 8 - 10% depending on credit. which is of course higher then prime rates, but still lower then hard money. your objectives or goals to maximize subprime financing should be to maybe hold the property for 1 - 2 years, (You may have to eat a 1 o 2 year prepay but it will lower the rate from a loan with a zero prepay,)while you build your credit back to an a-rating, then refi your cash out for more investment projects.

theirs tons of new products, on the market that fit your particular scenario, such as the option arms, option arms give you the luxury of choosing/paying your mortgage 4 different ways each month.. 30yr P&I, 15yr P&I, Interest only, or whats called Neg am(Negative-ammoritization)
the neg am, could allow you to get into a million dollar home for like $3k a month, they have 1% start rates.. these loans are really good for short term properties, like a year or 2.. especially if the property is in a desirable market.. the cons with it is that if you stay in it long time, you could end up in a negative equity situation..because your payment is lower then the p&I and ther is no principal going towards the balance..that is if you continue using or paying on the neg am choice..
the option arms and neg am's are really popular in California..but their making their way across the u.s.

I am a Small Commercial Lending specialist. I have NO DOC Small Commercial Loans up to $ 2.5 Million on Apartments and Mixed Use Properties and up to $ 1.5 Million on Commercial Properties with up to 75% LTV for Purchase and CashOut Refi with a 620 minimum credit score.

I also have Stated Income Commercial Loans up to 90%LTV up to $1 Million with a 700 minimum credit score

Paul Khin
239-573-7376
[email protected]
www.josephscott.com