Most real investors should not buy from realtors unless the realtor is an investor themselves and understand the business. Unfortunately, most seasoned realtors don’t even know how to calculate a cap rate. Even less advice on what a good deal looks like. And trust me I’m a broker and I have agents that have 20 years of experience that I’m still coaching on how to do this.

lets be fair here..   residential transnational realtors who make up by far the greatest amount of agents.. simply don't deal in the investment end .. they sell houses to families .. there is no need for them to understand cap rate or anything else related to investment real estate.. Some agents specialize in investment properties and or you have the whole Commercial brokerage community that all they do is investments..

Its obvious that many investors who are not really up to speed on how brokerages work dont understand this.. And think that all agents should have deep knowledge of the rental property niche..

Like other business's real estate has there specialties..
selling cash flow rentals is just one of them..  

Easy there tiger.  We aren't all bad :)  Some of us have a pretty good understanding of investments.  There is a lot more to investments than just cap rates.  Perhaps it would be better to choose your agent wisely for the type of transactions you want to transact.  Make sure they are either investors themselves, or focus on the investing.  Most agents can't be an expert of all areas of the market.  Just choose your agent wisely. 

Originally posted by @Sarah Brown :

Easy there tiger.  We aren't all bad :)  Some of us have a pretty good understanding of investments.  There is a lot more to investments than just cap rates.  Perhaps it would be better to choose your agent wisely for the type of transactions you want to transact.  Make sure they are either investors themselves, or focus on the investing.  Most agents can't be an expert of all areas of the market.  Just choose your agent wisely. 

 That's what he said in the very first paragraph.

Originally posted by @Jay Hinrichs :
lets be fair here..   residential transnational realtors who make up by far the greatest amount of agents.. simply don't deal in the investment end .. they sell houses to families .. there is no need for them to understand cap rate or anything else related to investment real estate.. Some agents specialize in investment properties and or you have the whole Commercial brokerage community that all they do is investments..

Its obvious that many investors who are not really up to speed on how brokerages work dont understand this.. And think that all agents should have deep knowledge of the rental property niche..

Like other business's real estate has there specialties..
selling cash flow rentals is just one of them..  

100% correct. On the flip side, I find too many REI that think like homeowners when they evaluate their potential deals.

From another point of view... most realtors don't want to work with investors anyway. Most people say they are "investors" but have never bought anything and might never do so. It's hard to differentiante which investors are true and serious and which are not. As a realtor myself, I keep my investor clients limited.

However, if you are a good investor then it doesn't matter as much who your realtor is. You just need him to open the door for you so you can see the property and have good negotiating skills so he can get you a good price. It's up to us to find deals and analyze them.

Originally posted by @Leopoldo Vazquez:

From another point of view... most realtors don't want to work with investors anyway. Most people say they are "investors" but have never bought anything and might never do so. It's hard to differentiante which investors are true and serious and which are not. As a realtor myself, I keep my investor clients limited.

However, if you are a good investor then it doesn't matter as much who your realtor is. You just need him to open the door for you so you can see the property and have good negotiating skills so he can get you a good price. It's up to us to find deals and analyze them.

...except very few REA know how to analyze deals rom REI's point of view. This is complicated even more since many REI don't really know how to either, and not all REI have the same criteria for deals.

It's really up to the REI to give the REA the REI's list of criteria for deals, and for the REA to use their knowledge and resources to bring properties to the table that match that criteria...and NOT to bring properties that are just "close".

This means the REA must understand the how's and why's of the particular REI they are working with so that the REA can be the REI's voice during the negotiation. Negotiation in this case, is a "doubles team". The REI is the one that dictates the terms, and the REA must be able to understand what/what the terms are so they can present/sell the deal to the sellers.

I have contacted several agents trying to find one in a market that can get me a deal that cash flows.  So far I have been unable to activate my cash because the agents have not helped me locate a sufficiently good deal.  Prove me wrong (podcasts say I am right and investors need to locate their own deals but I have a 200% W2 as an engineer so I am left without time to hunt deals OOS)

@Justin Mann if you have a demanding full time job, an out of state single family rental might nit be your best option.

Even with property management, it’s not anywhere close to passive or hands off.

Investing as a limited partner in a reputable syndication might be a better option. Truly passive and good returns. Most target 8-10% cash on cash and 14-18% IRR, but i've seen many exceed those as high as 70% IRR in 2-3 years.

Trusting a seasoned professional who does it for a living is sometimes easier than trying to do it yourself, out of state, with no experience.

If you are a high income earner, you can have a spouse claim QRP status and offset your income with the depreciation which is quite a large chunk in year 1 due to cost segregation + bonus depreciation.

Just a thought

Every realtor i have ever met is useless for telling you what to invest in. But sometimes there are good market deals that are gone in a day. A good realtor is one that will get you in to see the place same day you ask. Your realtor might as well get the 2.5-3% otherwise the sellers agent is going to get both sides. 

@Jorge Vazquez actually thats often why you should buy :) Listing agents who don't really understand the value of what they have are awesome to deal with. But your point is right...don't rely on residential brokers to advise you on any kind of investment. There are some great exceptions but they are fairly rare.

Originally posted by @Leopoldo Vazquez:

From another point of view... most realtors don't want to work with investors anyway. Most people say they are "investors" but have never bought anything and might never do so. It's hard to differentiante which investors are true and serious and which are not. As a realtor myself, I keep my investor clients limited.

However, if you are a good investor then it doesn't matter as much who your realtor is. You just need him to open the door for you so you can see the property and have good negotiating skills so he can get you a good price. It's up to us to find deals and analyze them.

Yes, I have seen this folk who call then self’s INVESTORS good chunk are tire kickers fresh out of an internet boot camp with a plan trying to buy with no money down, fill in the blank ____________

A seasoned agent will pass on this unless that get hard numbers prove they have real money are using offers that have a chance.

@Jorge Vazquez I agree. I have done 100s and 100s and 100s for flips, used a realtor about 10 years ago for about 15 deals. I built my network and get much better deals, 

All the best 

Now that REA's have been almost completely trashed here (including somewhat by me), I will tell you that finding a good REA (actually more than 1) is crucial to a greater success than moving ahead without one.  The key is they have to be trainable.  The ones that can be (and are willing to be) trained, are one of the most valuable members of your power team.

Originally posted by @Sarah Brown :

Easy there tiger.  We aren't all bad :)  Some of us have a pretty good understanding of investments.  There is a lot more to investments than just cap rates.  Perhaps it would be better to choose your agent wisely for the type of transactions you want to transact.  Make sure they are either investors themselves, or focus on the investing.  Most agents can't be an expert of all areas of the market.  Just choose your agent wisely. 

Exactly  I deal with top end agents who sell lux properties  they would never even try to sell some small rental and take all the time necessary to help an investor.. Investors tend to be pretty high maintenance sales. 

There are agents whose specialty is new construction.. Or back in the day you had Agents that specialized in OREO and had contracts with the big lenders and govmit agencies so they had to know how to do those deals.. And or the short sale specialist now you talk about a transaction that takes a uber amount of time.. back when this started I had my brokerage running and was going to start a division in short sales so I thought I would do a few myself to see how it went suffice it to say I hated it and never started that.. but some brokers did well with it and thats all they did or needed to do..  The brokers I knew in the mid west deep south and northwest that did the OREO they never left there office.  It was a wholesalers dream  bank sends you a tape you shoot it out to your best rehabbers write up all cash offers at pretty low price points.. charge a set min fee .  and off you went.. well as we know that type of brokerage cease to exist.. But who knows depending on how the govmit and lenders handle the Covid default situations could see it arise again.

And of course there are tons of newer agents always breaking into the market..  

But there are agents that understand and cater to owner occ as well as work with investors.. and understand what Cap rate is GRM and or any of the other alphabet labels. Most of the brokers that hang out on BP seem to be in this niche they understand how investment props work.

 

@Jorge Vazquez hell, most realtors can't spell their name, tie their shoes, complete a sentence, or be anything but greedy, selfish, wanna-be professionals. 

@Sarah Brown   he said "most."  not all.  MOST.  

You are going to have to work hard to find the right agent.   Then you must be specific on what you are look to buy.   Simply saying "find me a deal" does not cut it.   Also as an agent I get calls from investors wanting a house for $75K that will rent for $1200 with only 10K in repairs and then appraise for $160K.  The good news is I can just reach over to my good plant in the office and pic these off any time.   

With that being said be realistic on what you are looking for and consider contacting some larger property managers in the area you are considering.   They are realtors as well.   However if they have a portfolio of over a few hundred homes they always have someone wanting to sell a property.   

I agree, investors should screen their reltors and ask the right questions before working with them. As many others said the majority do the traditional realtor route and work in the suburbs. Getting answers from those questions will tell you very quickly if they are qualified to work with investors. There also isn't any reason you can work on both sides of this topic either. @Jorge Vazquez

@Jorge Vazquez I agree, most people that get their license (1.4 million licensed across the US), get it to buy and sell as a retail job. Nothing wrong with that, but also there are the select few that are buying investments as they are working. It is something that needs to be a priority, and just like a high percentage of people that have different jobs (chef, doctor, police officer, nurse, etc.) they do not put investing as a priority. 

It's a small percentage of people that really put forth the effort to analysis deals and put the money down to make their financial future brighter. That is with any profession, not just real estate agents. So, most do not know what numbers to run, or how to look for deals on market or off market. Those realtors are just looking to create income for their family and grow their real estate business.  

Yes working on finding a market outside of CA.  I have a condo that was rented for 5 years in Murrieta.  When it was rented it was a small negative draw.  It is paid off now and my mother has moved into it.  I looked into 4 plexes but it takes a signicantly higher amount to get into and rent laws could impact rent income dramatically.

@Jorge Vazquez . I agree. Realtors are trained in state-mandated residential transaction requirements. Anything beyond that is their own professional development on their own time and dime.

The problem goes both ways. Most of the buyers and sellers are dealing with their personal residence. Realtors cater to the majority because they will more often sell a primary residence than an investment property. I have an MBA in commercial real estate and finance, but as a Realtor, I have only done primary residence transactions. 🤷🏻‍♂️

Great points, we don’t need to slag agents over this, asking them to front for investors and complaining they aren’t great at it is like complaining that a Porsche has lousy trunk space or the minivan doesn’t corner well. Simply the wrong expectations

@Jorge Vazquez

In my experience, the realtors I use couldn’t care less if a property cash flows for me. I do my own homework. Every house I’ve bought since 2000 I’ve found myself. Whether for my primary or investments.

One house I bought for $23,100 on a Hudson & Marshall auction. The realtor I used for that one made about $300. I felt bad for him. Why would they bother, he lost money on that one.