First Time Investor - When to Speak w/ a Realtor?

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First Time Investor - When to Speak w/ a Realtor?

Jeremy Bates
Richmond, TX 路 Member since 2016 路 5 posts 路 1 vote

Hello BP members,

A little about myself.. I am 26 and reside in the greater Houston area. Over the past few months, I have developed an interest in buy-and-hold investment real estate. The reasons for my interest are many- leverage, flexibility, cash flow, possession on hard assets as well as soft, etc. In addition, my career keeps me in tuned with basic, macro knowledge of the Houston real estate market. REI seems like a perfect fit for me.

Now for my question. I possess the capital to put a down payment on my first rental home, but I don't really know what the next step is. I am learning as much about the industry as quickly as I can, but it is still very difficult to go it alone- I don't really have any mentors on the subject. I can look at housing listings, but from what source and what am I specifically looking for anyway? New information constantly contradicts my actions (if I look at listings on one source, I will read that that source is useless). I only know the theories of many important steps. The theory of evaluations, financial pro forma, and the overall process. I have no practical experience yet.

Is it time for me to speak with a realtor. I feel that a realtor, who is an investor themselves, would be an invaluable learning resource for me. In my mind, I am looking for a partnership- someone that will work with me (which would involve a lot of teaching in the beginning), whom will benefit greatly by working numerous deals with me in the future. It's a win-win in my mind, but I just don't know the proper edicate. Would it be improper for me to approach a realtor, looking to them to educate me? I feel like it could greatly accelerate my learning. 

Thanks for all advice!  

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Cindi Hoover
Real Estate Broker 路 Bakersfield, CA 路 Member since 2016 路 2 posts 路 2 votes
10y
Hi Jeremy, As a Realtor I can tell you that most agents are actually teachers at heart, we love to educate. I highly recommend that you talk to at least 3 agents who are investors themselves and discuss you plans. Make sure their personality is a good fit for you and that they are effective communicators. I also recommend that you create a written real estate investment plan to help you and your agent stay on path. You should build a relationship with an agent as early as possible so as soon as a property that matches your criteria comes available you will know about it. Good luck!
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  • Justin O'Kelley
    Investor 路 Holdenville, OK 路 Member since 2016 路 11 posts 路 6 votes
    10y

    Jeremy,

    I am also new to the real estate investing world, but what I did was find a realtor who manages/owns rental properties as well and told her exactly what I wanted to do, what my budget was, and asked her to show me some houses in my range.  She has taken me under her wing essentially and shown me the steps from buying to tenant screening to strategies to use down the road.  A good realtor is invaluable and one that is also an investor is priceless.  I would assume there are some in the Houston area, so I would start asking around and find one you want to do business with.   Good luck!

    Justin

    1Reply
  • Jeremy Bates
    OP
    Richmond, TX 路 Member since 2016 路 5 posts 路 1 vote
    10y

    Thank you for that information Justin. That's exactly what I was looking for. Good luck to you as well

    0Reply
  • Allen Hayes
    Investor 路 La Grange, KY 路 Member since 2016 路 44 posts 路 19 votes
    10y

     @Jeremy Bates good luck! I don't know the sources well for Houston but I can say for my own purposes I check Zillow, realtor.com, craigslist and a couple of others regularly.  Sometimes there will be a difference in data load times between them so it helps to get a few days head start on others who just look at the other source. 

    What kind of rentals do you want? You said buy and hold home but that's a super vague term.  Getting regular financing for up to a 4plex means you have options galore.  If you're looking just at single family homes, figure out your market there too.  A 3bed/1 bath 1K sqft house will be in a very different rental market than a 3bed/1.5 bath 2sqft house.  What condition does the property need to be in for you?  When you talk to the different realtors mention that you're still open and ask what they think about your options and which way they would go and why.  Just listening to their reasoning will be a great educational experience. 

    When you talk to realtors, be upfront that you're a newb and make sure they're ok with it.  Because you don't have experience yet prescreening properties, you're going to be requesting a lot of information on houses that you'll eventually learn to completely ignore because they don't fit with your goals.  Early on I probably sent 30% of my finds to my realtor, visited 15-20% and made stupid offers on a few. My last 2 closings were probably more 5% to the realtor for info, visited just the ones I liked and made offers on them same day.  We joked the other day that even though the last two were super easy for her, she still hasn't made back her gas money from the first one!

    0Reply
  • Cindi Hoover
    Real Estate Broker 路 Bakersfield, CA 路 Member since 2016 路 2 posts 路 2 votes
    10y
    Hi Jeremy, As a Realtor I can tell you that most agents are actually teachers at heart, we love to educate. I highly recommend that you talk to at least 3 agents who are investors themselves and discuss you plans. Make sure their personality is a good fit for you and that they are effective communicators. I also recommend that you create a written real estate investment plan to help you and your agent stay on path. You should build a relationship with an agent as early as possible so as soon as a property that matches your criteria comes available you will know about it. Good luck!
    2Reply
  • Jeremy Bates
    OP
    Richmond, TX 路 Member since 2016 路 5 posts 路 1 vote
    10y

    Thank you for your comments Allen. Yes, my search criteria is definitely something I will need to shore-up before proceeding, and I will be very open to opinions. 

    0Reply
  • Jeremy Bates
    OP
    Richmond, TX 路 Member since 2016 路 5 posts 路 1 vote
    10y

    That is great to hear Cindi. Thank you for your input.

    0Reply
  • Christina Farren
    Coatesville, PA 路 Member since 2016 路 9 posts 路 1 vote
    10y

    After reading your comments. I feel as if that is my next step too. Thank you so much.

    0Reply
  • Kim Younkin
    Real Estate Marketing Professional 路 Columbus, OH 路 Member since 2015 路 299 posts 路 125 votes
    10y

    Hi, @Jeremy Bates! That's very cool that you're so young, ready to invest, and are asking such great questions. Just my two cents, I do the marketing for a small investment realty in Columbus OH and we work only with investors looking for buy-and-holds. Our agents are personal investors, too, which is what makes them so good at what they do. I've learned so much working for them for the past year, so much so that I now want to invest in my own properties. If you find good people like the ones I work for, who know what they're doing and enjoy helping new investors like you, you'll find great teammates for your personal investment network. And those agents usually have connections to other people you need - lenders, property managers, contractors, insurance people, CPAs, lawyers...the list is long.

    Hints for finding these agents in Houston/Richmond: Check NARPM.org in the Houston area and look for property management companies run by agents. Not sure if Texas requires their PMs to be agents like our state does, but if it does, call those PM companies or look at their websites and determine if they are ALSO investment realties that actually help investors find the properties they'd eventually like to manage for them. Companies that do both are ideal, especially if they've been doing it a long time. And you don't HAVE to have them manage your property because they're usually happy to just help you close a purchase.

    Check Houston's local real estate organization and see if they list categories of agents, and whether there's a category for residential investment realtors. The thing you have to be careful about is that every agent will say they can help you buy investment property--because really, they can--but you want to work with someone who knows the rental cash flow analysis well and like you said, maybe even owns their own stuff.

    Join a local real estate investor group and ask people there. Check your local REIA group, see if there are local meet-ups. Go there and ask people for investment realtor referrals.

    You'll find your gem. Good luck!

    2Reply
  • Nicole Wilson
    Real Estate Agent 路 Houston, TX 路 Member since 2016 路 12 posts 路 7 votes
    10y

    Hello Jeremy ,

    As a Houston agent I do suggest networking as much as you can . REIA is great group also tonight Jet lending and renters warehouse sponsor an event I highly recommend you joining

    https://events.r20.constantcontact.com/register/ev...

    At the Texan grill

    Best of luck 

    0Reply
  • Phil Earley
    Property Manager 路 Cumming, GA 路 Member since 2015 路 261 posts 路 199 votes
    10y

    3 bedroom 2 bath ranch homes on a slab foundation connected to public water and sewer tend to cost less to maintain over the years.  1 ac unit, 3 sinks, 2 toilets, 2 exterior doors, etc....not much to maintain.  

    High ticket costs tend to be flooded basements, wet moldy crawlspaces, and septic systems that go bad......just an fyi for long term holds and your spread sheet.

    Good Luck!

    0Reply
  • Mark S.
    Plano, TX 路 Member since 2014 路 197 posts 路 33 votes
    10y

    @Jeremy Bates.  It sounds like you are off to a good start.  Personally, I would recommend you talk to a lender prior to a realtor.  It will give you an understanding of the price point you can afford and what your down payment options are.  These are different requirements for purchasing an investment property than purchasing a primary residence and you need to make sure you will qualify for the mortgage.  

    That being said I dont think it ever hurts to talk to several realtors.  As@Cindi Hoover said many realtors will be happy to talk to you and there is a good chance they will give you some ideas you had not considered before.  It will also let you see if you and the realtor work well together.

     @Kim Younkin you are correct property managers in Texas do need to have an RE license.

    Best of luck on your search!

    0Reply
  • Adrian Luna
    Fort Worth, TX 路 Member since 2016 路 39 posts 路 3 votes
    10y
    I am a realtor in Fort Worth Texas if you ever want to network and have any questions go ahead and pm me
    0Reply
  • Amber Koontz
    Houston, TX 路 Member since 2015 路 204 posts 路 68 votes
    10y

    @Jeremy Bates It sounds like you are in the phase just before you hit the ground running. I'm right there with you. I imagine that once I have everything written on paper and get a successful rental under my belt the sky is the limit. Two great posts that I've read in the past two days are: Lessons Learned From my 3rd BRRR posted by Stephanie Cabral, and My First BRRRR Property in the Houston Area posted by Iman Yu. I found those to be very helpful and motivating. Good luck馃憤

    0Reply
  • Tim Dye
    Columbus, OH 路 Member since 2015 路 51 posts 路 20 votes
    10y

    Hi @Jeremy Bates! 

    There are so many great posts and advice here. I would summarize with one simple focus- build your network. Focus on active investors, whether they are agents or not. Agents are a huge help, as long as they are knowledgeable and have personal experience in investing. You'll be surprised what will 'fall in your lap' with a strong network. Set a goal to network with one new investor every week, and bring something to the table so you can build a win-win relationship. Best of luck!

    1Reply
  • Sharon Tzib
    Real Estate Broker 路 Cypress, TX 路 Member since 2013 路 822 posts 路 468 votes
    10y

    Hi @Jeremy Bates! I've been an investor since 2002 and have helped well over 15 BP investors purchase buy and hold rental property in Houston in the last year. Almost all of them were newbies. Feel free to PM me and I'd be happy to discuss your goals further with you.

    0Reply
  • Tim Harper
    Houston, TX 路 Member since 2016 路 12 posts 路 3 votes
    10y
    Also a great wholesaler such as myself could be a great asset to you as well!
    0Reply
  • Jeremy Bates
    OP
    Richmond, TX 路 Member since 2016 路 5 posts 路 1 vote
    10y

    Thank you all for your input. Many of my, as well as others I am sure, questions have been answered. I feel confident in moving to the next step. 

    0Reply
  • John ArcanaPro Member
    Real Estate Agent 路 Lumberton, TX 路 Member since 2015 路 9 posts 路 2 votes
    10y
    Jeremy Bates I am a 28 year old full time Realtor and also an investor. I'm in the neighboring Beaumont, Tx area and I have access to the Houston MLS as well. I began investing at age 26 as well with rentals and will be tackling my first small flip next month. Coming from New Orleans to Beaumont in 2012 I was shocked at how much less expensive the housing market was here than larger metro areas so I knew I wanted to take advantage of it here. You don't need much cash to start here. Just to give you an idea of the bang for your buck here, I bought a 1200 sq ft, 3/2/1 new construction for just over $100,000 as my primary residence for a couple years before making it my first rental. I would recommend developing a relationship with an investing agent, like myself, because they know what to look for and what a good deal is in their market. We also know other investors and can share the knowledge we've gained from them: how they get creative on financing, what they look for in a deal, relationships they have with, lenders, contractors, etc. I would be happy to share what I've learned with you and assist you on the agent side as well.
    0Reply
  • Greg H.Pro Member
    Moderator
    Broker/Flipper 路 Austin, TX 路 Member since 2013 路 4k+ posts 路 4k+ votes
    10y

    Not to disparage my fellow Realtors but the majority have no idea how to help an investor or to identify a potential deal. Selling to a retail buyer(Owner Occupant) and selling to an investor is a totally different ballgame

    My suggestion is to involve yourself in a local investment group and you will gain contacts and referrals to Agents that specialize in investment properties

    0Reply
  • Kenneeth Strauss
    Spring, TX 路 Member since 2014 路 7 posts 路 0 votes
    10y

    Hi Jeremy,  I was an Investor before I became a Realtor. I have bee investing since 1995, an own both single family and multifamily properties. If you need your questions answered, please give me a call. I live in the Houston area.  Thanks  Ken

    0Reply
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