How to find an investment property buyer agent
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If you want to find better deals and expand your rental property portfolio more quickly, it can be helpful to have an investor-friendly real estate agent on your team. However, not all real estate agents are equipped to work with investors due to a lack of necessary skills.
In this article, we will explain what to look for in an investor-friendly real estate agent as well as some of the best ways to find an agent who understands investment real estate. We will also discuss how to find an agent who is willing to work with investors.
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What exactly does it mean for a Investment property Buying Agent?
An Investment Property Buyer’s agent is a real estate professional who understands the motivations behind real estate investors purchasing a rental property as well as the characteristics that investors seek out in a dwelling.
The majority of real estate agents have clients who are interested in purchasing homes but are more concerned with superficial aspects, such as the hue of the carpet or the age of the appliances.
You probably couldn’t care less about these things if you were an investor in real estate; however, you might use them as negotiating points when you’re putting together a deal.
The financial metrics that investors are most interested in are the fair market rent, operating expenses, cash flow, return on investment (ROI), and potential tax benefits of owning a particular rental property.
A real estate agent who is investor friendly is aware of how these metrics function, in contrast to the vast majority of real estate agents who are unaware of their operation.
You may or may not want an investor-friendly agent who is also a real estate investor, and your decision will depend on the level of experience you already have as an investor in rental property.
Advantages of Using a Buyer's Agent When Purchasing an Investment Property
It makes good sense for investors to hire an agent who has a solid understanding of real estate investing for a number of different reasons, including the following:
1. Buyers agents can help you Identify Market Trends
The local market, as well as which micro markets or neighbourhoods may be ready for the best investment deals, is something that a good investor-friendly agent is well-versed in.
When your real estate agent is aware of the type of investment property you wish to acquire – for example, a single-family rental, a small multifamily building, or a value-add rehab – he or she will be able to assist you in zeroing in on the deals that are the ideal fit for your business strategy.
For instance, a particular neighbourhood or even a specific street might be an up-and-coming area that the general public is not yet aware of yet because it is still under the radar screen.
A seasoned real estate agent who has their finger on the pulse of the local market can assist you in finding properties that have the greatest potential for making a profit.
2. Determine the Potential Gains That Could Be Obtained From the Local Market
A good Buyer’s agent who is an investor Friendly should also be able to assist you with calculating potential returns based on the activity and trends of the local market.
If you are an investor in real estate, it is likely that you are already familiar with the various financial calculations that pertain to rental properties, such as cash flow, nett operating income (NOI), cap rate, gross rent multiplier (GRM), and return on investment (ROI). An investor-friendly agent will also be familiar with these calculations.
For instance, you could request that your agent looks for properties that have a GRM that is 8.0 or lower. This is due to the fact that a property’s potential for profitability is directly proportional to the amount of rental income it generates in relation to its purchase price.
Let’s say the median property price in the market is $450,000, and the median annual gross rental income is $48,750. What does this tell us about the market? Your real estate agent will search for homes with a price tag of less than $450,000 that generate the median rental income as well as homes with a price tag of the median that generate a gross annual rental income of more than $48,750. The GRM would be lower than 8.0 in both of these scenarios.
3. Buyer's Agents can Provide information on local connections and contacts
You should also be able to get access to the investor-friendly real estate agent’s preexisting local contact network if you work with one who is investor-friendly.
It is possible that the local real estate community is a close-knit group, as is the case in many other industries.
If you know someone who can introduce you to the local players in the market, you will be able to tap into connections that would take you years to build up on your own if you had to do it on your own.
The difference between having a rental home that generates a healthy return on investment year after year and having a rental home that barely breaks even financially can be a matter of knowing the best lenders, local contractors, and local property managers in the area.
4. Discover Listings Both On and Off the Market
Even though it is possible to find appealing investment opportunities on the MLS, the best deals are frequently the ones that are not yet listed for sale. This is especially true in the case of multifamily properties.
You will have access to pocket listings or off-market property owned by other real estate investors if you work with an agent who is investor-friendly and who also works with other local investors.
What to look for in a Investment property Buyer's Agent
In order to bring this article to a close, let’s talk about some of the more subjective qualities that an investor-friendly real estate agent should possess.
The punctuality of the representative, both in terms of attending scheduled meetings or phone calls and in terms of responding to your inquiries within the allotted amount of time, is the first quality you should look for.
This is significant because it provides you with information about the level of professionalism exhibited by the agent. It’s likely that real estate agents who are chronically late because they were preoccupied with something else won’t devote the time and attention to your company that it merits.
Second, you should enquire about the agent as to whether or not they work in the real estate industry full-time. Many people who work in real estate are what are known as “weekend warriors.”
You shouldn’t go to a lawyer Or an accountant who only works part-time for the same reasons that you shouldn’t go to an agent who only spends a few hours each week working on their business.
For the same reasons, you shouldn’t hire an agent who only spends a few hours each week working on their business. Instead, what you need to do is find an agent who derives the entirety of their income from collaborating with investors such as yourself.
Finally, you should look for an agent who is familiar with the financial metrics that are used by owners of rental property.
Ask the real estate agent specific questions such as what the current market GRM is for single-family rental properties and what the average ROI is that his or her clients currently earn at this time.
Agents who are familiar with these computations will be able to provide you with prompt responses to your questions in a timely manner.
Where to look for an Investment property Buyer's Agent
Some of the best ways to find a real estate investing group include:
- National Real Estate Investors Association (National REIA); and
- National Real Estate Investment Club (National REIC).
- BiggerPockets’ Directory of Real Estate Investment Clubs;
How to locate a real estate agent who is willing to work with investors
Organizations that manage rental properties
Organizations that invest in real estate
The designations and certifications offered by the NAR
How to conduct an interview Investment property Buyer's Agent
When you talk to an investor-friendly Buyer’s agent, here are some of the most important questions you should ask them during the interview:
- How long have you been working with real estate investors who buy [your type of investment, such as single-family rentals, multifamily property, etc.]? What is your level of experience in this field?
- Do you currently make investments in the aforementioned kinds of real estate? [For what reason(s) not?]
- Describe the steps you take when looking for investment properties to rent out as rental properties.
- Do you have access to off-market or pocket listings? If so, how frequently do these listings become available to you?
- How many clients do you currently work with, and do the majority of your customers invest in real estate from out of town or close to home?
- How long is the typical relationship that your customers have had with your company?
- Could you please put me in touch with one or two of your customers so that I can ask them about the services you provide?
- In the event that I require assistance with these matters, are you able to provide referrals for reputable real estate attorneys, property managers, lenders, escrow officers, and contractors?
- Do you offer anything else in addition to real estate services?
- In order to get in touch with you, what is the most effective method? [Phone, email, text, etc.]