Reverse R.E market search: 1st find agent then decide which market. Thoughts?

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Reverse R.E market search: 1st find agent then decide which market. Thoughts?

Dan N.
Member since 2019 · 119 posts · 60 votes

Hear me out.
Usually the process is that first, you select a market you are interested in (especially for OOS investors) and then look for boots on the ground.

Over the past 6 months, I have selected a few interesting markets and have interviewed multiple agents in each of those markets.
One of the things I noticed is that the vast majority of agents don´t offer any unique selling point other than representing someone when an MLS property is found (either by buyer or by an auto search they set up).

In today´s market conditions, it is increasingly more difficult to find a great deal on market.

If I could find an agent who "drives for dollars", cold calls lists etc and actively searches for great deals, I would be willing to invest in other markets that are not on my radar.


Thoughts?

PS.
If you happen to have an agent who does these activities, I would love to connect with them, regardless of where they are (as long as they are landlord friendly states)

1Reply
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Eric FernwoodBusiness Member
Realtor · Las Vegas, NV · Member since 2014 · 996 posts · 1k+ votes
2y

Hello @Dan N.

When I started investing, the only value realtors provided was sending MLS data sheets for the properties I selected. Once I decided on a property, they facilitated closing. In my opinion, they contributed almost no value.

I do not agree that the order should be to find a good agent and buy where they are located. If your goal is financial freedom, then the investment location is the most important decision you will make.

Financial freedom is more than just replacing your existing income. It's about maintaining your current lifestyle for as long as you live. To achieve this, you need a passive income that meets two requirements:

  • Rents must outpace inflation: If rents do not outpace inflation, no matter how many properties you own, you cannot achieve financial freedom due to inflation continuously eroding purchasing power.
  • Income persistence: Financial freedom requires that your income lasts throughout your life.

Whether rents outpace inflation and how long the income lasts depends on the city where you invest.

Start with an initial list of potential cities and then eliminate any city that does not meet additional criteria. I started with cities with a metro population >1M.

✅ Economic stability. This requires a metro population >1M. Smaller cities tend to be dependent on a single company or market sector. Wikipedia

✅ Significant and sustained population growth. Use Wikipedia for population growth data.

✅ Low operating costs: The three most apparent costs for investors are income taxes, property taxes, and insurance. Tax Foundation, Insurance - ValuePenguin, State Property Tax Rates - Rocket Mortgage

✅ Low crime rate: Companies depend on attracting talented workers. Talented workers will not move to a high-crime city. Do not invest in any city on Neighborhood Scouts’ list of the 100 most dangerous US cities.

✅ Low risk of a natural disaster: The issue isn't your property. Insurance will cover the cost of rebuilding. The real problem lies in the community: jobs, stores, roads, healthcare services, gas stations - everything has been destroyed. Your previous tenants had no choice but to relocate. Without employment opportunities and essential services, they won't return. Meanwhile, debt service, taxes, insurance, maintenance, and other expenses persist without interruption. The best indicator of the probability of a natural disaster is the relative cost of homeowners insurance. The lower the cost, the less likely a natural disaster. Use this national homeowner insurance cost comparison site to compare insurance costs. Never buy in a state with high-cost homeowners insurance.

✅ Pro-business environment: Google search

✅ No rent control of any kind. Rent control is a strong indicator of an intrusive government: Google search

After filtering out cities that fail any of the above criteria, you will have a short list of potential cities. The next criterion is the existence of an experienced investment team.

Investment Team

Why is it essential to work with a local investment team? Podcasts, books, seminars, and websites only provide general information. You will purchase a specific property in a specific city with specific local conditions and regulations. Only an experienced local investment team has the local knowledge, processes, resources, and skills you need to be successful. I would consider another city if there is no existing investment team.

Also, working with an investment team usually does not cost more. For instance, we have delivered over 490 investment properties and charged our clients a fee on only four or five, which were exceptional circumstances. In all other cases, our fees were paid by the seller's listing agent, not by our client.

The leader of an investment team is an investment realtor.

Investment Realtor vs. Residential Realtor

While there are usually thousands of residential (or "investor friendly") realtors in a metro area, there are usually only one or, at most, two Investment Realtors.

Residential realtors enable people to buy or sell homes. The process is simple. Homebuyers select properties, and the residential realtor provides access. Once selected, the residential realtor facilitates the offer and the closing process. Some residential realtors occasionally sell real estate that will become rental properties. However, residential realtors provide limited value beyond supplying MLS data sheets.

Investment realtors enable people to buy rental income properties. Investment realtors are always part of a team because only a team of experts can provide all the knowledge, processes, and services needed for you to consistently buy performing properties. As an example, below is the process we follow.

Below is how we work with the property manager to validate investment properties.

How to Find an Investment Realtor

There is a process for finding an investment realtor. It starts with compiling a list of candidates. Get names of realtors from:

  • Real estate investing websites (such as Biggerpockets.com)
  • Property managers
  • Local investors
  • Real estate brokers
  • Google searches
  • Local meetups

Once you have a pool of candidates, the next step is to identify the investment realtor by using a set of interview questions.

Ask each candidate the same questions and record their responses. Below are some sample questions. It is unlikely to find a candidate with the "perfect" response to every question, but they should provide reasonable answers.

  • Tell me about your investment team - You're looking for a response like, "I've worked with X property manager for years. We've completed X properties." "I work with several renovation companies...”
  • Do you or have you owned investment properties? - If the candidate has not personally owned investment properties, I would reject them.
  • How many investment properties did you close in the last 12 months? - Some realtors only sell two or three properties per year. However, this level of sales does not provide enough repetition to develop the necessary processes, experience, and resources. In my opinion, being proficient in this field requires selling a minimum of 12 investment properties per year.
  • Did you or your client select the properties? This is an important question. Residential and investment-friendly realtors do not choose properties. Instead, they send MLS data sheets for the properties requested by the client. The client evaluates the properties and selects one or more to make an offer. If you do all the work, the realtor adds very little value. Reject any candidate if the client chooses the property.
  • What were your primary selection criteria? - It could be the initial return, appreciation, tenant pool, or something else. You're looking for a plausible answer based on analytics, not opinion or “feelings.”
  • How did you estimate rent and time to rent? - They should be able to describe a process like, "I look at recently rented comparable rentals." Another good answer is that they work with a property manager who supplies this information. If they answer Zillow, Redfin, Rentometer, etc., they do not know how to evaluate investment properties. Next candidate.
  • Tell me about your renovation process. - You are looking for an answer similar to, “I work with the property manager to determine a list of renovation items. Next, I work with XXX renovation company.”

These should get you started.

Final Words

The most important investment decision you will make is the location. If you choose to invest in a city where rents have not outpaced inflation, no matter how many properties you own, your income will continuously decline until you are forced back on the daily worker treadmill.

[email protected]702-358-8884
FERNWOOD Team, KW VIP Realty520 Reviews
WebsiteView Page
1Reply
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  • Joe HomsBusiness Member
    Flipper · Mission Viejo, CA · Member since 2014 · 2k+ posts · 1k+ votes
    2y

    @Dan N. I guess I don't qualify since I am not in a Landlord Friendly State (California.)  However, I totally agree with you.  You should be looking for wholesalers in the states you want to invest in as they are really the boots on the ground for deals.  Agents, even though they are licensed, are not very educated when it comes to investing in Real Estate.  I would change your focus and keep asking the same questions.

    Good Investing... 

    [email protected]949-625-4533
    1Reply
  • Dan N.
    OP
    Member since 2019 · 119 posts · 60 votes
    2y

    @Joe Homs 

    Regarding wholesalers, my issue with using them for deal flow is that those deals usually don't allow you to do an inspection prior to purchase, which for me is a red line.

    I actually have 1 agent who does do great off market work, but I have only found 1 in 6 months and would like to look into other markets

    1Reply
  • Eric FernwoodBusiness Member
    Realtor · Las Vegas, NV · Member since 2014 · 996 posts · 1k+ votes
    2y

    Hello @Dan N.

    When I started investing, the only value realtors provided was sending MLS data sheets for the properties I selected. Once I decided on a property, they facilitated closing. In my opinion, they contributed almost no value.

    I do not agree that the order should be to find a good agent and buy where they are located. If your goal is financial freedom, then the investment location is the most important decision you will make.

    Financial freedom is more than just replacing your existing income. It's about maintaining your current lifestyle for as long as you live. To achieve this, you need a passive income that meets two requirements:

    • Rents must outpace inflation: If rents do not outpace inflation, no matter how many properties you own, you cannot achieve financial freedom due to inflation continuously eroding purchasing power.
    • Income persistence: Financial freedom requires that your income lasts throughout your life.

    Whether rents outpace inflation and how long the income lasts depends on the city where you invest.

    Start with an initial list of potential cities and then eliminate any city that does not meet additional criteria. I started with cities with a metro population >1M.

    ✅ Economic stability. This requires a metro population >1M. Smaller cities tend to be dependent on a single company or market sector. Wikipedia

    ✅ Significant and sustained population growth. Use Wikipedia for population growth data.

    ✅ Low operating costs: The three most apparent costs for investors are income taxes, property taxes, and insurance. Tax Foundation, Insurance - ValuePenguin, State Property Tax Rates - Rocket Mortgage

    ✅ Low crime rate: Companies depend on attracting talented workers. Talented workers will not move to a high-crime city. Do not invest in any city on Neighborhood Scouts’ list of the 100 most dangerous US cities.

    ✅ Low risk of a natural disaster: The issue isn't your property. Insurance will cover the cost of rebuilding. The real problem lies in the community: jobs, stores, roads, healthcare services, gas stations - everything has been destroyed. Your previous tenants had no choice but to relocate. Without employment opportunities and essential services, they won't return. Meanwhile, debt service, taxes, insurance, maintenance, and other expenses persist without interruption. The best indicator of the probability of a natural disaster is the relative cost of homeowners insurance. The lower the cost, the less likely a natural disaster. Use this national homeowner insurance cost comparison site to compare insurance costs. Never buy in a state with high-cost homeowners insurance.

    ✅ Pro-business environment: Google search

    ✅ No rent control of any kind. Rent control is a strong indicator of an intrusive government: Google search

    After filtering out cities that fail any of the above criteria, you will have a short list of potential cities. The next criterion is the existence of an experienced investment team.

    Investment Team

    Why is it essential to work with a local investment team? Podcasts, books, seminars, and websites only provide general information. You will purchase a specific property in a specific city with specific local conditions and regulations. Only an experienced local investment team has the local knowledge, processes, resources, and skills you need to be successful. I would consider another city if there is no existing investment team.

    Also, working with an investment team usually does not cost more. For instance, we have delivered over 490 investment properties and charged our clients a fee on only four or five, which were exceptional circumstances. In all other cases, our fees were paid by the seller's listing agent, not by our client.

    The leader of an investment team is an investment realtor.

    Investment Realtor vs. Residential Realtor

    While there are usually thousands of residential (or "investor friendly") realtors in a metro area, there are usually only one or, at most, two Investment Realtors.

    Residential realtors enable people to buy or sell homes. The process is simple. Homebuyers select properties, and the residential realtor provides access. Once selected, the residential realtor facilitates the offer and the closing process. Some residential realtors occasionally sell real estate that will become rental properties. However, residential realtors provide limited value beyond supplying MLS data sheets.

    Investment realtors enable people to buy rental income properties. Investment realtors are always part of a team because only a team of experts can provide all the knowledge, processes, and services needed for you to consistently buy performing properties. As an example, below is the process we follow.

    Below is how we work with the property manager to validate investment properties.

    How to Find an Investment Realtor

    There is a process for finding an investment realtor. It starts with compiling a list of candidates. Get names of realtors from:

    • Real estate investing websites (such as Biggerpockets.com)
    • Property managers
    • Local investors
    • Real estate brokers
    • Google searches
    • Local meetups

    Once you have a pool of candidates, the next step is to identify the investment realtor by using a set of interview questions.

    Ask each candidate the same questions and record their responses. Below are some sample questions. It is unlikely to find a candidate with the "perfect" response to every question, but they should provide reasonable answers.

    • Tell me about your investment team - You're looking for a response like, "I've worked with X property manager for years. We've completed X properties." "I work with several renovation companies...”
    • Do you or have you owned investment properties? - If the candidate has not personally owned investment properties, I would reject them.
    • How many investment properties did you close in the last 12 months? - Some realtors only sell two or three properties per year. However, this level of sales does not provide enough repetition to develop the necessary processes, experience, and resources. In my opinion, being proficient in this field requires selling a minimum of 12 investment properties per year.
    • Did you or your client select the properties? This is an important question. Residential and investment-friendly realtors do not choose properties. Instead, they send MLS data sheets for the properties requested by the client. The client evaluates the properties and selects one or more to make an offer. If you do all the work, the realtor adds very little value. Reject any candidate if the client chooses the property.
    • What were your primary selection criteria? - It could be the initial return, appreciation, tenant pool, or something else. You're looking for a plausible answer based on analytics, not opinion or “feelings.”
    • How did you estimate rent and time to rent? - They should be able to describe a process like, "I look at recently rented comparable rentals." Another good answer is that they work with a property manager who supplies this information. If they answer Zillow, Redfin, Rentometer, etc., they do not know how to evaluate investment properties. Next candidate.
    • Tell me about your renovation process. - You are looking for an answer similar to, “I work with the property manager to determine a list of renovation items. Next, I work with XXX renovation company.”

    These should get you started.

    Final Words

    The most important investment decision you will make is the location. If you choose to invest in a city where rents have not outpaced inflation, no matter how many properties you own, your income will continuously decline until you are forced back on the daily worker treadmill.

    [email protected]702-358-8884
    FERNWOOD Team, KW VIP Realty520 Reviews
    WebsiteView Page
    1Reply
  • Michael K GallagherBusiness Member
    Real Estate Agent · Columbus OH · Member since 2018 · 1k+ posts · 1k+ votes
    2y

    Hey @Dan N. I'm an investor agent in the central OH market. and take what I'm about to say with a grain of salt because my market may be different than what you have experienced.  I honestly do mostly on market deals, I'm sure if I put some effort into finding off market deal flow I probably could, and I have on occasion gone out looking for specific assets for clients who have a criteria that is pretty specific, generally these are larger commercial assets.  

    I think there is generally a misconception among investors that off market means its a good deal and on market means its too expensive.  When people generally find "deals" on or off market, the property has an issue, its got tenants that need kicked out, or needs heavy rehab or has an upside with the addition of a bathroom etc.  

    But if the investor is looking for essentially a light rehab, or turnkey rental, and to use financing, and to negotiate remedy, and to do a full due diligence, then they are not really playing in the same league as the above investor as far as risk and therefore returns. And in this case regardless of if the property is on or off market they are most likely going to pay market rate. You may be able to get a slight discount for some convenience of not listing the property but at that point there is little "value prop" the investor is offering the seller to take an under market offer.

    We've been having good results finding deals on market that have been sitting a while, perhaps were overpriced initially or as mentioned above have an issue.  

    Regarding your point about should you find a market first or find a team first, There are solid people in every market, and in my book the demographics and economic trends of the market and submarkets should take president.  We spend a ton of time and money collecting data and providing analytics for our retail clients.  Combining the physical attributes of a site with the market demographics can be a black art and can very much make or break the future of a business.      

    [email protected]614-362-2231
    1Reply
  • Bradley BuxtonBusiness Member
    Real Estate Agent · NV · Member since 2023 · 1k+ posts · 714 votes
    2y

    @Dan N.

    I agree that most agents do not add much value to investors. I'm an Agent in the Tahoe / Reno area and at our brokerage we have tools specifically for investors that analyze the entire market. Think Wall Street tools for Main Street investors. We also collect data on rentals and actually research and underwrite the properties. We can then find the best deals based on investor metrics. I'm happy to be a resource and show you how we are very different from standard resi agents.

    0Reply
  • Bill SchrimpfBusiness Member
    Real Estate Agent · Reno, NV · Member since 2014 · 353 posts · 189 votes
    2y
    Quote from @Dan N.:

    Hear me out.
    Usually the process is that first, you select a market you are interested in (especially for OOS investors) and then look for boots on the ground.

    Over the past 6 months, I have selected a few interesting markets and have interviewed multiple agents in each of those markets.
    One of the things I noticed is that the vast majority of agents don´t offer any unique selling point other than representing someone when an MLS property is found (either by buyer or by an auto search they set up).

    In today´s market conditions, it is increasingly more difficult to find a great deal on market.

    If I could find an agent who "drives for dollars", cold calls lists etc and actively searches for great deals, I would be willing to invest in other markets that are not on my radar.


    Thoughts?

    PS.
    If you happen to have an agent who does these activities, I would love to connect with them, regardless of where they are (as long as they are landlord friendly states)


    Interesting Idea. In Nevada, as a Licensed Real Estate Agent, I can loose my license for pocket listings (e.g. driving for dollars) or taking a commission from an off-market (non-mls) listing. Add to that, our MLS rules require that an MLS user, always uses MLS. MLS's are often owned by regionals Realtor's associations, and Realtor's want all agent's to be Realtors...

    [email protected]775-741-2326
    ERA Realty Central - Bill Schrimpf58 Reviews
    WebsiteView Page
    0Reply
  • Dan N.
    OP
    Member since 2019 · 119 posts · 60 votes
    2y
    Quote from @Bill Schrimpf:
    Quote from @Dan N.:

    Hear me out.
    Usually the process is that first, you select a market you are interested in (especially for OOS investors) and then look for boots on the ground.

    Over the past 6 months, I have selected a few interesting markets and have interviewed multiple agents in each of those markets.
    One of the things I noticed is that the vast majority of agents don´t offer any unique selling point other than representing someone when an MLS property is found (either by buyer or by an auto search they set up).

    In today´s market conditions, it is increasingly more difficult to find a great deal on market.

    If I could find an agent who "drives for dollars", cold calls lists etc and actively searches for great deals, I would be willing to invest in other markets that are not on my radar.


    Thoughts?

    PS.
    If you happen to have an agent who does these activities, I would love to connect with them, regardless of where they are (as long as they are landlord friendly states)


    Interesting Idea. In Nevada, as a Licensed Real Estate Agent, I can loose my license for pocket listings (e.g. driving for dollars) or taking a commission from an off-market (non-mls) listing. Add to that, our MLS rules require that an MLS user, always uses MLS. MLS's are often owned by regionals Realtor's associations, and Realtor's want all agent's to be Realtors...


     WOW really? First time I hear about that.
    So curious as how investor friendly agents differentiate themselves from each other in that market?

    0Reply
  • Bill SchrimpfBusiness Member
    Real Estate Agent · Reno, NV · Member since 2014 · 353 posts · 189 votes
    2y
    Quote from @Dan N.:
    Quote from @Bill Schrimpf:
    Quote from @Dan N.:

    Hear me out.
    Usually the process is that first, you select a market you are interested in (especially for OOS investors) and then look for boots on the ground.

    Over the past 6 months, I have selected a few interesting markets and have interviewed multiple agents in each of those markets.
    One of the things I noticed is that the vast majority of agents don´t offer any unique selling point other than representing someone when an MLS property is found (either by buyer or by an auto search they set up).

    In today´s market conditions, it is increasingly more difficult to find a great deal on market.

    If I could find an agent who "drives for dollars", cold calls lists etc and actively searches for great deals, I would be willing to invest in other markets that are not on my radar.


    Thoughts?

    PS.
    If you happen to have an agent who does these activities, I would love to connect with them, regardless of where they are (as long as they are landlord friendly states)


    Interesting Idea. In Nevada, as a Licensed Real Estate Agent, I can loose my license for pocket listings (e.g. driving for dollars) or taking a commission from an off-market (non-mls) listing. Add to that, our MLS rules require that an MLS user, always uses MLS. MLS's are often owned by regionals Realtor's associations, and Realtor's want all agent's to be Realtors...


     WOW really? First time I hear about that.
    So curious as how investor friendly agents differentiate themselves from each other in that market?

    I should add some nuance. If an agent is pure commercial, does not participate in the MLS (small multifam or SFR) then lots of the headaches disappear, but they still must advertise residential property to the public using tools like Loopnet and signs. This effectively prevents prohibits pocket listings.

    Your questions make me want to push back on the term "Investor Friendly".  Every agent I've met is investor friendly if they think a buyer has money, and investors are always rolling in cash and credit, right!!!???  Even here in BP, a platform for investors, the term is clouded because of their Featured Agent program, advertising investor friendly agents.  It is a revenue generator for BP, just like the Premier Agent program generates revenue for Zillow.  

    Lets use "Investment educated" agent. Now the answer is easy; vocabulary and education. An experienced person will know things like, NOI, COC, CAP Rate, depreciation, accelerated depreciation, vacancy rate, forced appreciation, rent rates in the neighborhood, vacancy rates, rental rate trends, a good handyman, etc.

    I like most of what being an agent is, contracts, problem solving, marketing a property, negotiation, helping people, lending, title, all that cool geek stuff.  I don't like "marketing myself" which is why I use the BP Featured Agent program, I buy leads from BP.  For me, that is the answer, just pay for the lead.

    [email protected]775-741-2326
    ERA Realty Central - Bill Schrimpf58 Reviews
    WebsiteView Page
    1Reply
  • Virginia MarphisPro Member
    Real Estate Agent · Reno / Sparks, NV · Member since 2013 · 174 posts · 59 votes
    2y

    MY ANSWER: First Find THE RIGHT Investor friendly Realtor.... or partner to help you research the different markets. My real answer is IT DEPENDS.  What are your goals? What are you looking to achieve in what amount of time.  Having a coach or mentor is important too help you find the right team to guide you on your path, whatever it may be.    

    0Reply
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