REALTOR®
. You will be
working closely with your agent(s)…choose wisely. I recommend calling several real estate
agents who specialize in income property, and familiarize yourself with the
areas and pricing. When you meet an
agent, find out how much they own themselves – ask them directly. If they do not own any property, move on and
find someone who does. No one has a
better opportunity to find good deals in real estate than a real estate
agent. How can they competently advise
you on investing if they cannot even do it for themselves?
Once you have found an agent with whom
you’d like to work, have them set you up on their system to send you property
listings daily or weekly, depending on your time frame for buying. When you receive these lists, start driving
the neighborhoods. Keep a look out for
rent signs in the area, and call around to determine what rents are going
for. It will not take long before you
have a feel for appropriate pricing for properties as well as rents in the area
in which you are looking. Your agent can
assist you with a lot of this, but I feel it’s better to know a lot of this
information yourself without having to rely on your real estate agent.
Lender
. I suggest you get yourself pre-approved. This is very important; when you know how
much you can spend, this ultimately will determine in which areas and what
types of properties you can buy. You
also want to make sure you know you qualify before you start looking at property. You may learn that you
qualify for more than you thought, opening up areas and possibilities you had
not considered. Or, you may learn that
you don’t qualify for as much as you had hoped, or you may learn of some issues
on your credit. Knowing what you can or
cannot qualify for is extremely important, as it will assist you in creating
your initial investment goals. Once you’re pre-approved, this will save you
time when you find a property you like; also, it may make your offer stand out
among multiple offers, and the real estate agents you talk with know you are
serious and will be better able to find a property for you.
Also, it’s important to
note that different types of properties have varying types of loan
requirements. For example, you may be
able to purchase an owner-occupied duplex with zero down while a commercial or
5+-unit apartment building will require at least 25% down payment. In addition, loan fees and interest rates can
vary depending on the type of property on which the bank is lending.
I have
complied a list of questions for you to ask potential real estate agents and/or
brokers when you start to interview them. Choose the questions that are most important to you or that are most
relevant to your situation, e.g., are you buying, selling, exchanging, or
refinancing? Are you looking for a
lender or real estate agents? Are you
just getting started and need some advice and help?
1.
Do you have a
written business plan and mission statement?
2.
Do you work
full-time in real estate sales?
3.
Are you a Real
Estate Broker or a Sales-Associate? Are you a Loan Broker or Banker? Please explain the difference.
4.
What area and in
what aspect of the market do you specialize?
5.
Do you own any
investment property? If yes, how many units, what type of property and where
are they located?
6.
Do you have an
assistant?
7.
How often will I
hear from you after I hire you to represent me?
8.
How will you
stay in touch with me: phone, email, mail?
9.
Do you have a
list of references I can call?
10.
Do you have a personal web site? What is the address?
11.
Does your company have a web site? What is the
address?
12.
Do you have a permanent e-mail address? What is it?
13.
How will I be notified of potential properties?
14.
Can you explain a 1031 tax exchange? Will it be
beneficial to my situation?
15.
Do you offer property management services; if yes,
what are the fees?
16.
Will you analyze properties prior to sending them to
me?
17.
Do you have a written marketing plan specifically
designed to sell my property?
18.
How often do you market properties directly to
buyers?
19.
How many income properties have you sold in the last
three months?
20.
Will you produce a professional brochure or custom
website of my property? Do you have samples?
21.
May I cancel our business relationship if I am not
satisfied?
22.
How do you find potential buyers? Do you have a
system to identify potential buyers?
23.
What other marketing techniques will you use to get
my property sold?
24.
In what ways do you encourage other agents to sell my
property? How do you network?
25.
How many listings do you have? What percentages of
them sell?
26.
What presence have you developed through your
marketing?
27.
With what other sites does your web site link?
28.
Where do you list your properties for sale?
29.
What automated communication tools do you use for
24-hour access and service?
30.
Do you have a database of qualified buyers for my
property?
CPA
. Don’t try to do your own
taxes! Hire an accountant with
experience in real estate. Just like
there are different flavors of ice cream, there are different types of
accountants. After a few tries, I found
an accountant who understood real estate and how to apply the tax laws legally
in our favor. He has helped save me
thousands of dollars, and is available for those unique questions about how a
real estate item can affect my overall financial picture. The best way to find a good accountant is to
ask fellow real estate investors whom they use to do their taxes.
Attorney
. I have used attorneys for
two important tasks - creating a legal business structure, like a limited
liability company (LLC) or corporation; and advising me on evictions. I strongly suggest you create a legal entity
to hold and operate your real estate investments. Anything can happen, and this structure is
designed to reduce the risk of your other assets. My experience with evictions has been
limited; I can attribute this to using a thorough rental application
process. It is important to keep all
your signed contracts and applications in an organized file system. When you are faced with an eviction, the
first thing your attorney will ask for are all the signed contracts and notices
serviced to the tenant. To expedite the
process and help your court case, you should keep an organized filing system
scanned electronically.
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