With change comes panic for many. The recent tightening of mortgage rules has reduced the number of eager first time buyers who now do not qualify. Add all the noise of how our economy is on the verge of collapsing through media outlets, and the average consumer is left more confused now than ever. “Should we sell, renew our mortgage to these historical low rates or keep renting”? Marketing guru’s will tell you that ‘a confused mind always say’s no’, making the job of the average realtor challenging. When it comes to running a business we must “adapt or die” and that’s exactly what we are starting to see among the realtor community. With the buyer pool drying up and sellers being too confused to decide what they want, realtors are looking for business elsewhere to supplement their income.
For sophisticated investors, now is a great time to take advantage of the confused consumer. As Warren Buffet says, “be fearful when others are greedy and greedy when others are fearful”. With homes not selling as quick and with lower price tags adding the combination of historical low interest rates, it’s a perfect storm for investors to pick up deals left, right and center. This is what average realtors are picking up on and are starting to shift their marketing strategies to appeal to investors. The problem is, these realtors are just following the trend to keep their sales up and do not have enough knowledge about investing in real estate to ensure their clients success. So, what kind of questions should you ask realtors before you begin working with them to find out if they are investment savvy?
1. Do they invest in real estate themselves?
Can you really take advice from someone who does not practice what they preach? If they invest in real estate themselves, they most likely know what attracts tenants and what makes a property cash flow. Do not let the amount of property one owns be a deciding factor either. I know many investors and realtors who own 2,5,20 properties and STILL have little knowledge of running their business properly and finding QUALITY properties. Ask them how much cash flow they receive from each property and how they came to that conclusion. For example, when calculating costs for my clients, I find properties that cash flow over and above their mortgage, taxes, condo fees (if applicable), insurance, property manager, 5% vacancy and 5% maintenance. This is how sophisticated investors budget for their properties. If their own properties cash flow after these calculations, you may be speaking to a savvy realtor.
2. Are they a member of a real estate investing organization?
Being a part of a real estate investing group is an important part of expanding ones network and knowledge of the business. Making sure your realtor is part of a group like this is important. It shows they are passionate about the business and take their job/themselves seriously. This is also important because you will be able to tap into their network of trades, properties managers, lawyers, specialized mortgage brokers etc. Having access to a large team is very beneficial to you, the investor.
3. Do they specialize?
This is the most important question you should be asking a realtor before working with them. Do they specialize in a type of investment that you are looking for? Working with a specialist allows them to provide you with a list of great properties almost immediately. Because they specialize in one type of investment, they should already have properties on their “watch list” just waiting to send to their clients. An example I always like the tell my clients is “would you let a heart surgeon treat your broken leg? They can probably do it a pinch for they did go to medical school and achieve a decent knowledge of how the overall body works before they decided to specialize. Or, would you rather let a doctor who operates on broken bones all day every day treat you?” The same thing applies to real estate investing. If your realtor says “I can find you multi-family buildings, single family properties, student rentals, commercial space, what ever you’re looking for!” It’s time to run the other way. They’re only in it for the commission cheque!
I hope this gave you a different perspective on what to look for when hiring a realtor to help you find an investment property. If you are looking to invest in KW/Cambridge, feel free to contact me. I specialize in single-family condo townhomes ranging from $140,000 – $175,000 – Freehold townhomes from $175,000 – $260,000 and single family semi’s and detached from $180,000 – $260,000. See how specific that is?? I look forward to working with you and expanding your single-family investment portfolio!
Mat Piche
RE/MAX Real Estate Centre
homes@kwpropertypro.com
KW Property Pro 