Is David Greene wrong?

52 Replies

I apologize if this is a newbie question and for the provocative title :)

In David’s book Long-Distance Real Estate Investing, he says its beneficial to find an agent who is also an investor in the area. I understand the benefits of the on-the-ground knowledge and the unique perspective an investor-agent brings.

But won’t that agent keep all the best deals to themselves?

Maybe.  But, who cares?  

If you can buy a great deal, would you skip it because the agent got a slightly better deal?

If you would, please send all those great deals to me!

In short, yes. Any deal you find from someone else will always have the opportunity to purchase it before you - Wholesalers, Property Managers selling Inventory for clients, Agents who get deals brought to them, etc. 

What you have to realize is that often, they don't want the trouble of doing the deal themselves and would like the instant cash. Of course, some of them will take the best deals for themselves, then if they don't take it, offer to their favorite clients first. You just want to be as high on the chain as possible, from the best deal source available. 

The other alternative would be to market and find your own deals from scratch by contacting owners yourself. Then you get to wholesale and keep the best ones for yourself. Just matters where you want to spend your time/energy/money. 

A newbie here, but my two cents spend like everyone else's, so here goes:

If that were true, the agent would own ALL of the properties. A decent deal that you have your eye on might not be the property type your RE agent likes or the area that a RE agent likes to work in. Or maybe they're over extended and don't have the capital to spend.

They might snag a deal that you like, but there are tons of properties available - and there are tons of agents available if the agent you're working with tries to steer you away from purchasing a property that they want for themselves (I actually think this might bite them in the butt, though, since they aren't working in their client's interest - word travels fast in the internet age). And if the property isn't available now doesn't mean it wont come up for sale soon.

If you find an agent who LIKES working with RE Investors who throw low-ball offers and put them through tons of work, I'm inclined to congratulate them for scoring something for themselves!

T.

@Sean Mcmahon . That suggestion seems pretty good to me honestly, and no they won’t keep all the deals, so I think that’s solid advice.

I think some of the other advice he gives is sort of shoddy at best personally. Such as encouraging newbies to flip a property long distance.

Originally posted by @Sean Mcmahon :

@Greg Scott @Daniel Kong @Thomas J. Clifford I hadn't thought about it that way. That makes sense. Thanks for the insight! 

@Caleb Heimsoth I am curious where else you think David's advice falls flat? 

Thanks guys! 

 The idea that a top producing agent in any given area is going to work with some Random Joe-Schmo from out of state is also sort of absurd.  Do you know how many tire kickers there are in real estate? It’s a lot.  

He also sort of went full-guru so I would take a lot of his advice with a grain of salt.  When you start selling books and “systems”, I would be take it with caution 

@Sean Mcmahon , you have to realize that they do not have infinite resources and cannot buy every great deal and what you are looking for is their great on the ground knowledge and expertise. If the person is a good agent they should be able to find you deals that match the set criteria that you gave them and if they are not you can get rid of them. I guess the reason an investor-agent makes sense is because you want an agent who understands your mindset as an investor and isn't looking to sell you a house as if you want to live there.

Originally posted by @Caleb Heimsoth :
Originally posted by @Sean Mcmahon:

@Greg Scott @Daniel Kong @Thomas J. Clifford I hadn't thought about it that way. That makes sense. Thanks for the insight! 

@Caleb Heimsoth I am curious where else you think David's advice falls flat? 

Thanks guys! 

 The idea that a top producing agent in any given area is going to work with some Random Joe-Schmo from out of state is also sort of absurd.  Do you know how many tire kickers there are in real estate? It’s a lot.  

He also sort of went full-guru so I would take a lot of his advice with a grain of salt.  When you start selling books and “systems”, I would be take it with caution 

That's a great point...hadn't thought of that before. Thanks! 

Never count other people’s pockets. It’s a waste of your time, effort and energy. If someone brings you a deal, it fits your criteria and it’s going to make you money.... don’t worry about how much the wholesaler is making, if the RE agent is getting some sort of kickback, etc, etc.... sure the realtor will get first pick in most instances but they might not have the time, Capital, knowledge or desire to pursue a deal.

@Sean Mcmahon if you want the most discounted deals go find them yourself. David Greene's book and most mass publications are designed for the masses- who need methods that don't pose great barriers to entry. 

Getting your own deals is hard. You have to be skilled and learn the craft. If that sounds worthwhile to you, then you will get better deals. If you don't want to do the leg work (which is fine, you may have other higher priority things in life) then try the agent or a reputed wholesaler/rental property provider. Nothing wrong with letting a deal hunter make money for being a deal hunter, while you make money on your rental property for being a landlord. Everyone has a role!

As far as the ever so common "if they're so good why not keep them":

I sell a lot of my best deals because I sell property. It's my business. That's how I generate revenue. Apple sells their phones, Ferrari sells their cars. They're good at it, their product has a healthy demand from their target audience, so they focus on providing that to them. Same with deal the provider selling the deal.

@Tanner Marsey I wish everyone I worked with read your post. The "someone else is making money on this" apprehension and mindset is RIDICULOUS and ever so common. Nobody feels that way when they buy their property off the MLS and the seller makes a ton of money on the appreciation. People don't treat any other product or service this way. These are usually the folks, in my experience, that never end up buying any property. Or end up settling for a crappy one that they self-sourced b/c they feel okay about the fact that a seller didn't profit.

Originally posted by @Elliott Elkhoury :

@Tanner Marsey I wish everyone I worked with read your post. The "someone else is making money on this" apprehension and mindset is RIDICULOUS and ever so common. Nobody feels that way when they buy their property off the MLS and the seller makes a ton of money on the appreciation. People don't treat any other product or service this way. These are usually the folks, in my experience, that never end up buying any property. Or end up settling for a crappy one that they self-sourced b/c they feel okay about the fact that a seller didn't profit.

I’ll never understand that mentality. I want to see everyone get paid!  

Originally posted by @Caleb Heimsoth :
Originally posted by @Sean Mcmahon:

@Greg Scott @Daniel Kong @Thomas J. Clifford I hadn't thought about it that way. That makes sense. Thanks for the insight! 

@Caleb Heimsoth I am curious where else you think David's advice falls flat? 

Thanks guys! 

 The idea that a top producing agent in any given area is going to work with some Random Joe-Schmo from out of state is also sort of absurd.  Do you know how many tire kickers there are in real estate? It’s a lot.  

He also sort of went full-guru so I would take a lot of his advice with a grain of salt.  When you start selling books and “systems”, I would be take it with caution 

All of those systems guru's are nonsense and produce impractical advise. I love the classes out there that go "you have to invest in markets with good schools, a growing population, job growth, low vacancy rates, and low unemployment". Then the investors go and buy a negative cash flowing deal in some expensive market just to lose their pants when the economy puts them in the spin cycle. So many of those rules of thumb lead new investors to failure. I'm a big hater of BRRR and 1% rule rhetoric.

Originally posted by @Elliott Elkhoury :
Originally posted by @Caleb Heimsoth:
Originally posted by @Sean Mcmahon:

@Greg Scott @Daniel Kong @Thomas J. Clifford I hadn't thought about it that way. That makes sense. Thanks for the insight! 

@Caleb Heimsoth I am curious where else you think David's advice falls flat? 

Thanks guys! 

 The idea that a top producing agent in any given area is going to work with some Random Joe-Schmo from out of state is also sort of absurd.  Do you know how many tire kickers there are in real estate? It’s a lot.  

He also sort of went full-guru so I would take a lot of his advice with a grain of salt.  When you start selling books and “systems”, I would be take it with caution 

All of those systems guru's are nonsense and produce impractical advise. I love the classes out there that go "you have to invest in markets with good schools, a growing population, job growth, low vacancy rates, and low unemployment". Then the investors go and buy a negative cash flowing deal in some expensive market just to lose their pants when the economy puts them in the spin cycle. So many of those rules of thumb lead new investors to failure. I'm a big hater of BRRR and 1% rule rhetoric.

I went against the grain and bought property in a city that was voted one of the top 10 impoverished cities in the country in 2009.  But that was 10 years ago and the whole area is on the upswing now.   

@Caleb Heimsoth Love when that happens. I bought a bunch of 20 caps in a transitioning part of Indiana, just outside of Chicago, 2.5 years ago. There's a line of investors out of the door who want them for 10-11 caps when they finally realized they're excellent deals. Oh, and what do you know.... they've appreciated. Haha

Originally posted by @Caleb Heimsoth :

@Sean Mcmahon. That suggestion seems pretty good to me honestly, and no they won’t keep all the deals, so I think that’s solid advice.

I think some of the other advice he gives is sort of shoddy at best personally. Such as encouraging newbies to flip a property long distance.

I cant think of any thing more risky than someone with no experience with rehab flipping etc.. decides to go at it like presented in that book.. there is going to be a lot of hearts broken and Bigger pockets become smaller pockets.. that's just uber crazy and risky.  

Originally posted by @Jay Hinrichs :
Originally posted by @Caleb Heimsoth:

@Sean Mcmahon. That suggestion seems pretty good to me honestly, and no they won’t keep all the deals, so I think that’s solid advice.

I think some of the other advice he gives is sort of shoddy at best personally. Such as encouraging newbies to flip a property long distance.

I cant think of any thing more risky than someone with no experience with rehab flipping etc.. decides to go at it like presented in that book.. there is going to be a lot of hearts broken and Bigger pockets become smaller pockets.. that's just uber crazy and risky.  

 But it sells books!!

@Sean Mcmahon they would if they were a multi millionaire and could afford every good deal. Also, most agents aren’t investors... think of them like car salesmen.. do all car salesmen also find beat up old cars and fix them to sell?? I doubt it. Agents are going to make more money per time with less hassle then speculating a flip and dealing with the unknowns of a flip.

I found an investor-agent way back when I got started and she was the most important professional in my investing career...game changer.  She could not buy them all...and timing mattered too.

Originally posted by @Mike Dymski :

I found an investor-agent way back when I got started and she was the most important professional in my investing career...game changer.  She could not buy them all...and timing mattered too.

great Real Estate broker/agents are very important..  

@Sean Mcmahon I've found that any agent who is not also an investor will just ignore me when I present myself as an investor to them. It really does help to find an agent who understands the investing process and has done so themselves. Until you can source your own deals, its very beneficial to work with an agent who is also an investor.

Originally posted by @Caleb Heimsoth :
Originally posted by @Elliott Elkhoury:
Originally posted by @Caleb Heimsoth:
Originally posted by @Sean Mcmahon:

@Greg Scott @Daniel Kong @Thomas J. Clifford I hadn't thought about it that way. That makes sense. Thanks for the insight! 

@Caleb Heimsoth I am curious where else you think David's advice falls flat? 

Thanks guys! 

 The idea that a top producing agent in any given area is going to work with some Random Joe-Schmo from out of state is also sort of absurd.  Do you know how many tire kickers there are in real estate? It’s a lot.  

He also sort of went full-guru so I would take a lot of his advice with a grain of salt.  When you start selling books and “systems”, I would be take it with caution 

All of those systems guru's are nonsense and produce impractical advise. I love the classes out there that go "you have to invest in markets with good schools, a growing population, job growth, low vacancy rates, and low unemployment". Then the investors go and buy a negative cash flowing deal in some expensive market just to lose their pants when the economy puts them in the spin cycle. So many of those rules of thumb lead new investors to failure. I'm a big hater of BRRR and 1% rule rhetoric.

I went against the grain and bought property in a city that was voted one of the top 10 impoverished cities in the country in 2009.  But that was 10 years ago and the whole area is on the upswing now.   

Your last point sounds like Buffet's advice: be greedy when others are fearful and fearful when others are greedy. And it clearly paid off for you! 

 What did you look for in this city that demonstrated it would make a good investment? 

Originally posted by @Elliott Elkhoury :

@Caleb Heimsoth Love when that happens. I bought a bunch of 20 caps in a transitioning part of Indiana, just outside of Chicago, 2.5 years ago. There's a line of investors out of the door who want them for 10-11 caps when they finally realized they're excellent deals. Oh, and what do you know.... they've appreciated. Haha

 Elliot, how did you identify that market? What were some key indicators to you? You obviously went against the grain and were rewarded for that! 

@Sean Mcmahon

That's secret sauce Mr. Mcmahon!

I want nonvolatility in markets I'm investing in now to keep me crash-proof. Also want high rent to value, low taxes and owner paid utilities bills, landlord friendly laws, and high rental demand in working class neighborhoods so I can invest in the most profitable assets while keeping my turnover low.

I would say look to secondary markets that have all of these features. You're going to get outcompeted by investors that are willing to make a whole lot less money than you if you play around with major markets. FL is pricey, IMO!

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