Investor/Realtor Update-1.5 yrs later and My Dilemma

9 Replies

Hi BP

I have been meaning to come back to update you on my journey as investor/Realtor.

First off, thank you being the catalyst and helping me through this process. It was the best decision ever.

I grew up with RE investors, have a finance major, and have entrepreneurs for parents. I spend my weekend managing properties and listening to strategies growing up. 

I started in 2001 and did my first MADE-ALL-MY MISTAKE FLIP in 2003. Went on to buy/sell 3 commercial buildings, and flip 2+ Residential and managing buy/hold properties.

As an INVESTOR, I do my own extensive due diligence, and once I find a deal, I call a Realtor to "get" it, and we basically just CLOSE.  

As an INVESTOR, when I sell a property, it's in it's highest and best use and I have exit plans lined up. So my property sells pretty fast.

So when I found myself in the position to be able to buy 1 property a year or more. I decided that I needed to get my license!  And the fact that my REALTOR doesn't know  how to deal with me... she can't find me stuff! It was super frustrating.  

So I got my LICENSE! Sign up for course, took test.

I called all the brokerages and picked my firm.  I came into this WITH A FLIP TO SELL. So I went with the firm with the most MARKET PRESENCE and when I realized I have been using their site since 2001 in 3 different states..... no brainer right.

I sold my listing in 1 day! 

MY MAIN GOAL AS REALTOR: Find my own stuff, meanwhile, help other ppl find home.  

In my 1.5 yrs, I am now certified SFR (foreclosure) agent, and Commercial Agent.

My deal exposure has shot up exponentially.

PRO:

*As an investor, it wasn't difficult to meet other investors for client

*I am a good investor friendly realtor because like minds, you don't need to teach me

*Investor client buys multiple times.

*I get to see how other investor thinks and analysis without taking my own risks.

*I got FREE education on how to inspect a home, what to look for.

*I LOVE WHAT I DO...

CON:

*my commission SUX. I work with investor and here it means under 100K homes.

*60% of my deal fall through, and my SFR require a lot of attention and time.

*investor for clients, I have narrowed my clients to like minds.  There are low ballers just offering to get a hit.. and there are investors like me that did research not shoot in the dark.

DILEMMA: Why I write this blog..

I am have just opened yet another LLC for myself to do REI. And finding myself wanting to FSBO everything...

 PLEASE ADVISE: Other investor/realtor in my shoe, who has license and buy own stuff... when do you use your brokerage and when do you fsbo?  My firm is not 100% commission on "my own deals"

It is 100% only if I buy in my name and only 2x a year. I buy via LLC.

 I have not issues with disclosure, surprisingly well received as investor/realtor or landlord/agent.

My issue is like all investor, I want to cut out the middle man, but in this case...me!

Thanks 

I am a combination investor/Realtor. And there have been times when I have gladly paid a commission to another Realtor to co-list a rehab/flip that I have completed. You need to be able to focus on what you do best, what you enjoy doing the most, and what brings you the most profit per hour. If that means that you keep your Realtor license for the MLS access for buying great deals, but you actually use another Realtor to list your properties after you have rehabbed them, then so be it. I have a deal going on right now where I "sold" one of my houses 3 years ago with owner-financing. Now, I want that tenant-buyer to get a bank loan and complete the sale and cash me out. I am gladly paying another Realtor 3% to work with this buyer to get it done, and I am focusing my time on other things.

that is so true ;) Thx

My manager keeps wanting to turn me into a salesperson. Work the 200k+ home, sell 500k home. Sit open houses

Which would make good income but she doesn't know that I'm managing 5 units mix bldg, rehabbing a duplex and doing property mgmt on my own stuff ON top of my Realtor job.

@Jennifer Lee  

in our market its next to impossible to sell FSBO and given the internet and how educated buyers are in our market if you go FSBO they want you to knock 6% right off the top because our not using an agent.

find a broker that allows you to do your own deals.. and or you should be or almost ready to take the brokers test become your own broker LIke I did 38 years ago.. then you don't need anyone's permission you are free to do what you want.

@Jay Hinrichs  

That is an excellent point. I have thought about moving to bother firm. Haven't thought about getting my own broker license

Hi Jennifer,

FLIP the SCRIPT.

Why not go for your CCIM designation??

Forget residential all together and go commercial.

If you want property management then you can do commercial and have regular hours. Many investors in the residential crowd are low ballers trying to squeeze every cent out to increase returns so they can quit the job.

I do not really focus on value add for commercial turn around's that much but even those properties trade at 1 million plus. Your broker mentioning moving up to the higher priced houses is smart AS LONG AS they are paying the costs or the seller is!

Those higher end homes in your local market take a longer time to sell and the carrying and marketing costs are very expensive until they sell. You could sell 3 out of 10 listings and almost be at a neutral position after broker split with no money gained. I have friends that have been doing the luxury market for 30 years. They only offer basic services for the listing. If the seller wants all this expensive advertising and exposure etc. then what they do is tell the seller to spend money and they will take it off commission when it sells. This keeps you from dropping 2,500 on ad spread in an upscale magazine they want with a 1 year listing agreement and 3 months in they decide not to sell. With YOUR money on the line they could care less. With THEIR money on the line the true intentions will come out and they will not want to over price the property as much.

I would rather sell 10 properties that are 10 million each in a year for commercial then 2,000 ( 50k ) residential houses for the same sales volume.  You would have to be closing over 5 houses a day in residential plus just the overhead would eat most of your returns alive.

Here is some more info for a commercial group for women.  

@Joel Owens  

I think commercial is the way to go too. I just need to figure out how I get there. Thanks for the link!!

Glad I could help Jennifer.

Just remember in commercial it's just like residential in one respect.

The smaller commercial properties are mom and pop type stuff. For commercial this is stuff generally under 1 million in price. Lot's of heavy lifting there and getting the buyers qualified and educated on the process.

Depending on if you are in a urban, suburban, or rural town will have differences. In rural areas the brokerages tend to be one stop shops. Meaning for the small towns they handle everything. In those towns for the most part it is local business owners and investors and not much national asset type companies. The demographics do not support them being there.

In suburban to urban core areas you can find specialty brokerages that only do commercial and within that certain sub types of commercial.

For instance I am known for apartments and also retail for specialty. For national quality assets the purchase price is much higher and the investors do not have to be local.

Learn the skills to trade up into much larger deals and get into circles with people of much higher net worth and liquidity.

@Joel Owens  

Thx you!! I'm at mom and pop lvl.

I own 2 now, and thx on your advise on them when I got them..

My first I was spoilt with triple net and awesome tenant. Sold at good profit. It was a buyout.

My current two are a headache but market changed too.

I found my tenants on my own even though I listed it with my firm. They came on my sign.

I don't see this as a dilemna at all.  If you didn't have a license you would be paying an extra 3%, now because you have a license you save 3%-brokers cut.  I work on 70/30 split with a cap then I keep all commissions.  There are so many different commission plans out there it should be a piece of cake to find one that works for you.  Even if your on a 50/50 split with your broker, if you buy a 100k investment, it's still 1500 cheaper than it would be if you werent licensed.  The way I see it, you have 3 options.  Suck it up,  your not going to save every single dime.  2. Sit down with your broker and negotiate a better commission split or a better agreement for properties you buy for yourself.  3. Go to another brokerage with better deal/get your brokers license start your own.

If your only doing your own deals and not actively looking to move units then you are a liability for your broker and they want their cut.  If you are savvy about how you do things, you can really make open houses work for you and generate additional money.  Open houses go 1 of 2 ways; they are super busy and you get plenty of leads to make more money or they are dead slow and you can sit there and do the clerical work that you need.  It's like working from Starbucks.    The key is picking and choosing the best open houses to do.

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