When you begin investing in real estate actively, you need to build a team. This team will help you automate processes so that it actually becomes quite passive for you. This is really powerful. But perhaps the most important member of your real estate investing team is your investor real estate agent.
Much like finding a good financial advisor, it is so important that you select the right investor real estate agent to work with. And unlike a financial advisor, an investor agent is a necessity.
So you need to be thorough and diligent in finding the right investor real estate agent. Interview a bunch of them. Take time picking the right one.
There are 5 important questions that you need to ask when interviewing potential investor real estate agents
But first, regardless of how they answer your questions, if you just don’t vibe with a certain agent or something seems off…walk away. Only work with people that you like.
Anyway, onto the questions…
1. Do you invest in real estate?
This is the most important question in my mind. I do not want to work with an agent that doesn’t actually invest in real estate themselves.
That’s like picking me, a plastic surgeon, to manage your diabetes. Sure, I have an idea of how to do that…but wouldn’t you want someone who actually does it on a daily basis?
So, if the answer to this question is “no,” I would politely move on to the next agent that you are interviewing.
Our investor agents invest in real estate and own over 80 units. This has been immensely helpful. Especially as we were starting out and learning. We were able to lean on their experience and advice.
It continues to help us today as they know not to hassle us with properties that don’t meet our criteria. That way no one wastes their time.
2. How do you measure cash flow on a property?
This question gauges their investment acumen a bit deeper.
What you are looking for is someone who speaks the language of investment real estate. And more so, you are looking for someone who recognizes that cash flow is the most important factor in screening and analyzing properties as I describe in this post.
So, if your potential investor real estate agents answers that they use cash-on-cash return or net operating income or the like, that’s great. See what their goal cash-on-cash return is. Mine is 10%.
But if they can’t give you an answer or are unfamiliar with these terms, they are not the agent for you. Even if they say they invest in real estate, they obviously do not do so in a strategy that is concordant with yours.
3. How do you view the role of appreciation?
This is a tricky one. And a topic of hot debate.
But it is important to get a straight answer on it. Most of you will know that I do not invest based on perceived market appreciation. And the reason is simple…no one can predict the future.
Investing for future market appreciation is speculation, not investing. But…market appreciation is a nice cherry on top.
So, I don’t dismiss market appreciation completely. Our agents will always give us an assessment of an area, if it is path-of-progress, and if they expect it to appreciate based on their experience. If so, that is an added benefit. But, I don’t invest solely based on that.
If your potential investor real estate agent is touted that she or he knows how to pick properties guaranteed to experience is not important because you should invest for appreciation, that’s not the agent for you.
For a more in depth discussion of why cash flow is most important in real estate investing, check this out.
4. What is your off market network?
A very nice perk of good investor real estate agents is if they are able to source quality off market deals.
That way, they can bring you potential investment properties before they hit the market and you can get a jump on them.
Our third investment property was an off market deal that our agents brought to us. There were some hiccups with this property, but that is unrelated to it being a quality off market lead.
So, try to get an assessment of their network for off market deals. Most agents will always say they have a great network. But move further than this. Ask how many off market deals they review weekly/monthly. How many off market deals have they closed in the past year? Do they have any now?
Vague answers will suggest that their network is not really as string as they may imply.
5. Are you willing to be patient with us?
Especially when you start out, you will likely be seeing a bunch of properties that you don’t even make offers on. It will likely take a bit of time before you close on your first deal. You are just learning and will need some guidance. And that’s what your investor real estate agent is for!
So, make sure to ask them and get a good sense if they are willing to be patient with you. Again, all agents are probably going to say yes. But you can judge their response to see if they mean it. Are they being patient in answering all of your questions? Are their responses thoughtful or rushed and dismissive?
You will also want to express to the agent that you are looking for a long term relationship. And that you are looking to build a portfolio of properties. So this is not a one time deal.
This way they know that you are going to be a quality long term client. And that you are looking for a quality long term agent. This is a way that you bring value to them.
Our first property was bought for $174,500. For our agents, this was a very small sale. But they knew that we had a long term plan and now we will be closing on close to $1 million in sales with them, with more to come in the future.
It has been a mutually beneficial relationship.
A great investor real estate agent is a guide…
…And hopefully they even become friends, which we have been lucky enough to experience.
But they need to be guides and educators for you. Someone who has done this before and can offer good, and even tough, advice when needed. In fact, our agents often tell us “no” more than “yes” when it comes to investment opportunities.
When buying our first property, Selenid and I were very nervous about self managing and were close to hiring a property manager for 10% of monthly rents. But, by talking to our agents and based on their experiences, we decided to self manage and automate like they do, which has worked out very well.
There also were many properties at first that we were interested in offering on. But our agents dissuaded us based on their experience and concern about collecting good rents. They were right and our patience paid off with a growing portfolio of awesome properties.
So, take your time and make sure you find the right investor real estate agent for you!
Here is some required reading for anyone interesting in starting or growing their real estate investments:
- A Real Estate Investing Guide for Physicians
- 5 Biggest Downsides of Real Estate Investing
- 7 Steps to Visualize the Big Picture in Real Estate
And don’t forget to sign up for my free masterclass webinar on the 12 Steps to Financial Freedom for Physicians!
What do you think? How did you find your investor agent? Any success stories? Any issues that you have had to overcome? Let me know in the comments below!