What to Look for in an Investor Real Estate Agent

Real estate agents come in all shapes and specialties. Some have a preference for relocation clients, others prefer to work only in one or two specific neighborhoods.

But what if you’re looking to find a real estate agent for investors? Being able to tell you the after-repair value of a property or project the cap rate for the rental downtown takes a specialist’s eye.

An investor real estate agent has the knowledge of rehabbing and rental markets needed to ensure the investment property you’re eyeing makes good “cents.”

Investor Real Estate Pros at Gilpin Realty

Our team of Snohomish real estate professionals at Gilpin Realty has extensive experience in the rental, rehab, and investment property market. We can help guide you through your investment property journey, whether it’s your first flip or your latest project.

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What exactly makes a real estate agent ‘investor-friendly’

When shopping around for an “investor-friendly” real estate agent, you’ll want to confirm that they have the needed expertise to guide you through your purchase.

These are some of the skills that we recommend looking for in your real estate agent when searching for the perfect investment property.

1.   Knowledge of off-market properties

The savviest of savvy investment real estate agents always have a pulse on what will be coming on the market soon.

With Zillow, Redfin, and many other homebuying apps opening up the floodgates to data from the MLS, it’s a serious advantage to connect with an agent who is aware of opportunities that have yet to be made public.

Usually, an investor-friendly agent will have a relationship with a wholesaler who seeks to provide homeowners with cash offers. These could be distressed sales or just homeowners trying to move quickly without all of the pomp and circumstance of going on the market.

An agent with knowledge of off-market investment properties provides you with more options in seeking your next investment.

2.   Ability to critically analyze a deal

When working in residential real estate, a deal can be fairly straightforward for a generalist real estate agent to negotiate.

An investor-friendly real estate agent will be considering more factors than just purchase price and loan qualifications. They’ll factor in considerations like:

  • Renovation costs
  • Potential rental income
  • Tax projections
  • More

They’ll also help you consider other factors that you may not have analyzed, like vacancy allowance, projected maintenance, lawn care, repairs, and other capital expenditures.

By analyzing things from a critical point of view, an investor-friendly agent will help you target the sweet spot necessary to make profit on your investment. Where general real estate agents may not notice a hidden cost, a real estate agent for investors will go into the deal with eyes wide open.

3. Savvy in investor jargon

Every sector of real estate has its own unique jargon, but investments come with an even more specialized world of vocabulary.

An agent that knows the ins and outs of real estate investing will be able to easily make sense of the many dimensions of an investment property deal.

Here’s some of the basic terminology to make sure your agent is familiar with:

  • Gross rental yield
  • Internal rate of return (IRR)
  • ARV
  • Net operating income (NOI)
  • Cap rate
  • Gross rent multiplier (GRM)

While we’re not encouraging you to quiz your real estate agent on vocabulary in a classroom-type environment, you should absolutely vet their understanding of these types of critical concepts.

An agent suited for investments should be able to speak to these concepts with confidence, and you won’t have to question your agent’s competency along the way.

4. Their own real estate investing experience

An investor-friendly real estate agent can stand above the rest if they’re an investor themselves.

You can be certain at that point that they’ve been through every dimension of the process and understand both the micro and macro steps that go into it.

As it has been said, experience is the best teacher. Running numbers on an investment property for someone else is not the same as running them for yourself.

It should also be noted that working with a real estate agent who is actively investing may pose some risk of them reserving the best opportunities for themselves. To hedge against this, seek out an agent who has a different property investment strategy than what you desire for yourself.

All in all, working with a real estate agent who is actively investing helps you tap into potential roadblocks and opportunities so you can adjust your investment strategy accordingly.

Other Skills to Look For

This list of skills should be a good starting point for you as you look for your ideal investor real estate agent. But here are a few other factors that are important in your choice of agent:

  • In real estate full-time and experienced
  • Aware of regional opportunities
  • An extensive real estate network
  • Knowledge of high-ROI home renovations
  • Property management knowledge and experience

Investment Properties in Snohomish

Being a historic area, there are lots of investment properties in Snohomish waiting to be tapped into. Working with a real estate agent with investment experience puts you ahead of the average flipper swiping through MLS listings on Zillow.

Our office is filled with real estate professionals that have a proven track record in investments. Click here to get in touch with us today.

Build a Plan of Action and Get Ready

Buying a home will probably rank as one of the biggest personal investments one can make. Being organized and in control will contribute significantly to getting the best home deal possible with the least amount of stress. It’s important to anticipate the steps required to successfully achieve your housing goal and to build a plan of action that gets you there.

Before you can build a plan of action, take the time to lay the groundwork for your decision-making process.

First, ask yourself how much you can afford to pay for a home. If you’re not sure on the price range, find a lender and get pre-approved. Pre-approval will let you know how much you can afford, allowing you to look for homes in your price range. Getting pre-approved also helps you to alleviate some of the anxieties that come with home buying. You know exactly what you qualify for and at what rate, you know how large your monthly mortgage payments will be, and you know how much you will have for a down payment. Once you are pre-approved, you avoid the frustration of finding homes that you think are perfect, but are not in your price range.

Second, ask yourself where you want to live and what the best location for you and/or your family is. Things to consider:

  • convenience for all family members
  • proximity to work, school
  • crime rate of neighborhood
  • local transportation
  • types of homes in neighborhood, for example condos, town homes, co-ops, newly constructed homes etc.

Is Buying a Home Still a Smart Plan

With the burst of the housing bubble, credit crisis, and millions of foreclosures across the country, you may wonder if buying a home is such a good idea after all. However, it’s important to consider all of the facts. The important message to take away from these events is not that buying a home is a bad idea, but that you must be smart about buying your home.

The housing market, like every type of market, unavoidably has its ups and downs. That doesn’t mean buying a home is a bad investment. As a long-term investment, homeownership is still one of the best investments for individual households. Historically, real estate has consistently increased in value, despite shorter periods of depreciation due to local markets and/or national economic conditions. The data shows that homes generally appreciate about 5% per year.

Savings & Investment

Five percent may not seem like a great return on investment, but you have to think about it in the context of the situation. For example, let’s say you put 10% down on a $200,000 house. That’s a $20,000 down payment, or initial investment. At a 5% annual appreciation rate, your $200,000 home would gain $10,000 in value during the first year. Earning $10,000 on an investment of $20,000 is a whopping 50% return.

For further perspective, let’s say instead of spending that $20,000 on a down payment, you invested it in the stock market. With a 5% return, you would gain only $1,000 in profit.

Tax Benefits

So now you’re saying that a home may have a higher return, but that’s before you consider all of the costs of home ownership, such as taxes, etc. Well, think of it this way: your property taxes as well as the interest on your mortgage are both tax deductible. You can deduct those costs from your income, thus reducing your overall taxable income. In other words, the government is subsidizing your home.

Other Benefits

It’s easy to get carried away with all of the economic reasons for home ownership, but it’s important to remember that not every reason is financial. Have you ever wanted to paint the walls of your apartment? Well when you’re renting, you can’t. Has anything in your apartment ever needed updating, but the landlord refused to do it? When you own a home, you can make the space yours in almost any way you want. And you benefit when you do home improvements, both financially and psychologically. Homes generally have more space, for storage, living, etc. than other living arrangements. Not to mention that you have space outdoors for barbecuing, pets, and kids. Owning your home carries with it a sense of pride, accomplishment, and even an elevated social status.

So when you’re considering buying a home, consider the broad range of benefits that owning a home can have. And always make sure you have an experienced real estate agent and loan officer to help make sure you’re getting a home that is right for you, both financially and psychologically.

Hot, Normal, and Cold Markets

Hot Market

This is an extremely competitive market and is advantageous to the seller. Sometimes, homes will sell as soon as they are listed or even before homes are listed. Typically, during a hot market, multiple offers will be made on each home and more often than not, homes will sell for more than the asking price. It is even more crucial to be prepared and to be ready as a buyer when the market is hot. It can be easy to get caught up in the bid for a home, but if you are prepared (pre-approved, solid in price range, realistic about your needs), it is easier to remain focused on your housing needs and price range.

Normal Market

In a normal market, there is a fairly large number of homes available and an average number of buyers. This market does not necessarily favor the buyer or the seller. A seller may not have as many offers on their home, but he or she may not be desperate to sell either. Again, it is the buyer’s responsibility to be prepared. During a normal market, the chances to negotiate are higher than in a hot market. As a buyer, you can expect to make offers at lower than the asking price and negotiate a price at least somewhat less than what the sellers are asking.

Cold Market

In a cold market, houses may be listed for more than a year and the prices of houses listed may drop considerably. This market is advantageous to the buyer. As a buyer, you have the time to make an offer that works to your best interest. It is not uncommon to low-ball and to find that sellers are accommodating to meet your needs. Keep in mind that even though this market is a great time for buyers, you do not want to lose your dream home by being unrealistic. Your goal is to get your dream home at the best possible price.

Avoiding Financial Stress

By asking the right questions, and knowing exactly what your needs are, you can find the right loan for you. There are certain approaches that you can take while mortgage shopping that can cost or save you money.

It is still true that the better qualifications you have, the lower your interest rate will be. However, there are mortgages available for almost everyone; it’s the interest rates or the down payments that vary.

Before speaking with a lender, know what monthly dollar amount you feel comfortable committing to. Then when you discuss mortgage pre-approval with your lender, it is easier for you to determine the monthly amount and what value of home the monthly amount translates into. Do not put yourself in the position where you will be paying more each month than you intended simply because the dream home requires it.

Do your research on the types of mortgages available to you and find the one that best suits your needs. There are a number of considerations to be made in terms of finding the best mortgage for each individual:

  • What type of market are you in? Are the interest rates falling or rising?
  • Do you want a fixed mortgage rate, where you will always know what your payment is going to be?
  • What are your long-term goals? Do you intend to resell the property? Do you only need the mortgage for a short time?

Finding the Right Seller

The best seller is one who is highly motivated. A highly motivated seller is more likely to sell at a price that is less than his or her house is actually worth. And it matters that you find out why. Learning the reason why can help you get the price you want and help the seller get what they want: a timely sale.

When given the opportunity to meet with sellers, ask them why they are selling. The reason could be anything, such as a job change to a new location or financial problems. If you can solve their problem, whether it is cash related or time related, do so. For example, if the sellers are highly motivated because they need to move quickly, give them a fast sale – and a lower price. If you can make an offer, even a low one, that gives them cash in a short time, they are more likely to accept.

There are also some sellers that you should avoid. Not every seller is as genuinely motivated as they make themselves to be. Some possible hints:

  • they stall on having the home appraised or inspected
  • they are unable to clear up liens against their property
  • they do not own 100% of their property
  • they push back the move-out date
  • they do not have a replacement property or back up plan
  • etc.

It is impossible to find the perfect seller. But it is possible to find out which sellers are legit and which ones aren’t.