Buying rental with an agent from the PM company we would use to manage it...

2 Replies

When you're looking to buy a rental, do you (or would you) use a buyer's agent from the PM company you plan to use for the management of the rental once you buy it? I'm wondering if there are any particular pros/cons to doing this versus using a separate buyer's agent.

Just curious for others' thoughts and experiences. Thanks!

Good question. If your due diligence is solid (price checking V competitors, checking for reviews, etc) I don't see a problem.

The "con" is that there is a *potential* conflict of interest.

However, as a *good* REI, your responsibility is, like @Jordan Thibodeau says, to do your own due diligence, run the numbers, and determine if the investment is good or not.

Specifically, I think the most important things to pressure test are 1) the expected rents, 2) any rehab or fix up costs, and 3) property fair market value. These must be verified independently of the PM-buyer agent to insure they are correct.

After that, there may be some significant "pros" to using the PM as the buyer's agent. Mainly, as the buyer, there shouldn't be an acquisition cost difference to you using them or a 3rd party agent. However, using them could put you on their good list of letting you know about good deals in the future.

Basically, I view it as, if I trust them to manage my property, I should trust (but verify) them to do other business for me. Notice the "but verify." That's important because you have to keep people honest when there is a potential for conflict of interest.

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