first time investor , how many realtors can you work with being an REI?

Question

Hi , first time real investor i want to invest out of state mainly in detroit , i see 2 companies i would like to work with i was seeing if many people use 2 realtors?

Thanks ,

Allen

Adam Bartomeo · Answer

Once I hear that a buyer is working with another agent, I'm out. If someone cannot show me loyalty then I do not want to work with them.

Travis Biziorek · Answer

Appreciate it, Bradley.

Allen and I have actually connected a few times as far back as March. But our model may not be a fit for what he's trying to do.

Always happy to provide some advice though.

Drew Sygit · Answer

@Allen Zhu @Bradley Buxton

Recommend you first figure out the property Class you want to invest in, THEN figure out the corresponding location to invest in.

If you apply Class A assumptions to a Class B or C purchase, your expectations won’t be met and it may be a financial disaster.

So, when investing in areas they don’t really know, investors should research the different property Class submarkets.

Here’s our OPINION for the Metro Detroit market (use as a template for your target area!) that we’ve learned in our 24 years, managing almost 700 doors across the Metro Detroit area, including almost 100 S8 leases.:

Class A Properties:
Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.
Vacancy Est: Historically 10%, 5% the more recent norm.
Tenant Pool: Majority will have FICO scores of 680+ (roughly 5% probability of default), zero evictions in last 7 years.

Class B Properties:
Cashflow vs Appreciation: Typically, decent amount of relative rent & value appreciation.
Vacancy Est: Historically 10%, 5% should be applied only if proper research done to support.
Tenant Pool: Majority will have FICO scores of 620-680 (around 10% probability of default), some blemishes, but should have no evictions in last 5 years

Class C Properties:
Cashflow vs Appreciation: Typically, high cashflow and at the lower end of relative rent & value appreciation. Can try to reposition to Class B, but neighborhood may impede these efforts.
Vacancy Est: Historically 10%, but 15-20% should be used to also cover tenant nonpayment, eviction costs & damages.
Tenant Pool: majority will have FICO scores of 560-620 (approaching 22% probability of default), many blemishes, but should have no evictions in last 2 years. Verifying last 2 years of rental history very important! Also, focus on 2 years of job/income stability.

Class D Properties:
Cashflow vs Appreciation: Typically, all cashflow with little, maybe even negative, relative rent & value appreciation
Vacancy Est: 20%+ should be used to cover nonpayment, evictions & damages.
Tenant Pool: majority will have FICO scores under 560 (almost 30% probability of default), little to no good tradelines, lots of collections & chargeoffs, recent evictions. Verifying last 2 years of rental history and income extremely important to find the “best of the worst”.

Make sure you understand the Class of properties you are looking at and the corresponding results to expect.

The City of Detroit has 183 Neighborhoods we have data on.

PM us if you’d like to discuss this logical approach in greater detail!

Dave Skow · Answer

@Allen Zhu-  thanks ..Try finding and working with a single agent for each sperate area you are considering ....if you are needing to use financing - get pre-approved before you begin looking - good luck

Caleb Brown · Answer

It can get sticky using multiple agents. With buyer agencies being required prior to a showing you may be limited. Some agents might write the agency for 3-6 months and tied to the area. I would try to find a great agent first that specializes with investors

Samuel Diouf · Answer

A good investor focused agent is sourcing deals from multiple sources and providing their clients with a consistent deal flow.

I would work with the agent that is doing that.

Travis Biziorek · Answer

We help investors do BRRRR's in Detroit. We source off-market deals, pair them with investors, and then hand hold through the rehab and city inspections when things are complete.

We have existing contractor relationships and a team on the ground to keep tabs on things and keep you informed along the way.

The catch is we're cash only on our deals, so it's not for everyone.

Bradley Buxton · Answer

@Allen Zhu

Connect with @Travis Biziorek. He has invested a lot in Detroit.

first time investor , how many realtors can you work with being an REI?

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