Monday, July 22, 2013

SMART INVESTOR: This Might Be The Biggest Mistake A Real Estate Investor Can Make

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Monday, July 22, 2013

Skipping A Realtor Might Be The Biggest Mistake A Real Estate Investor Could Make

What's the biggest mistake a real estate investor can make?

Not hiring a realtor.

Yes, they can be a big expense, but a realtor can be an invaluable asset when scoping out properties that you plan on investing a lot of money into.

Reyna Gobel, of InvestingAnswers, lays out the pros: "For a percentage of the purchase price, they'll negotiate, help you pick a property based on appreciation value, help you verify repair quality and help verify leasing contracts for rental properties."

How to pick a realtor: Like any homebuyer, referrals from friends, coworkers and family are a great place to start. Just be sure to cross reference any realtor on sites like Yelp, Zillow, and Angie's List, where you can check out their reviews.

Gobel offers a handy list of questions to bring with you on your first meeting with a realtor:

How can they help you assess the neighborhood appreciation potential? A Realtor can pull up detailed reports of current and past home prices in the neighborhood. Especially important fornegotiations are recent sales from nearby properties. They also need to have a good understanding of the local economy. Sales values don't increase when people don't have jobs.
How will they help you assess the quality of repairs? A good Realtor will recommend you ask for receipts for remodeling repairs, as well as Schedule D of their tax returns that lists repairs as well.
Will they run a title check? This is easy. All Realtors will do this, as well as recommend you have title insurance just in case.
How will they help you evaluate rental property? If you're planning on renting a property, it's extremely important to get details on the current tenant situation. Is the lease enforceable post-sale? Did they pay a deposit? If so, you could be responsible for refunding it when they leave if it's after the sale. With first month, last month, and a security deposit, you could be looking at paying anywhere from $2,000 to more than $5,000 out of your pocket.