Real Estate

9 Important Questions to Ask When Screening Your Real Estate Investing Team

Selecting, validating, renovating and managing a successful rental property requires specific skills, local knowledge, processes and resources. A local investment team is the only source for what you need. Without it, you’re just guessing.

The most important member of the team is the investment agent.

Investment agents are quite different from regular residential agents. Here’s how

Residential Agents

Residential agents help clients buy or sell homes. The process is simple: clients scan real estate sites or drip feeds and select the properties they want to see. The agent provides access to these properties.

If the buyer wants to submit an offer, the agent facilitates the offer. If the offer is accepted, the agent facilitates the closing.

Aside from adding a buyer to a drip feed, providing access to properties and handling paperwork, residential agents provide little value to the investor.

Investment agents

Investment agents help clients buy an income stream, not a home. They need to understand finance, market trends, ROI, and tenant demographics, and are always part of a team.

The process is completely different. Here is a high-level overview of our process:

  • Define the client’s financial goals.
  • Develop a property profile that supports the client’s objectives.
  • Find compatible features and generate analytics.
  • Conduct on-site evaluations for properties of interest, including sending annotated walkthrough videos to the client and property manager.
  • Get a property manager’s video-based appraisal of the property, including estimated rent, time to rent, and recommended renovation items.
  • Estimate the cost of renovations based on the property manager’s recommendation.
  • Suggest the price and terms of the offer.
  • Conduct due diligence, including inspections and in-person walkthroughs for property managers.
  • Get quotes on all renovation items.
  • Overwatch renovation after close of escrow.
  • Facilitate takeovers and rental listings to property managers.

the carrier

Investment agents and their team members provide a wide range of services, including property selection, property analytics (not MLS data sheets), validation, renovation management, and more. These are highly valuable services for investors.

Qualifying an investment agent

Finding a (good) investment agent can be difficult. The problem is that where there may be thousands of residential agents, there may only be one or two investment agents in the market.

Some residential agents occasionally sell real estate that becomes a rental property. However, the client selects the properties and provides all investment expertise. A residential agent generally does not provide any services beyond those required by homebuyers.

Interview Questions

How can you tell an investment agent from others? By asking the right interview questions.

Before interviewing candidates, make a list of 10 questions or less. You won’t have much time. Ask each candidate the same questions, and note each answer for later comparison.

Here are sample questions with acceptable answers. Will you get a candidate to answer each question “correctly”? Probably not, but make sure they provide reasonable answers.

  • Tell me about your investment team: You’re looking for answers like, “I’ve worked with X property manager for years. We’ve completed X properties,” or “I work with several renovation companies…” If they are not part of the investment team, they have no value to you. Move on to the next candidate.
  • Do you own investment properties? I will reject a candidate if they do not have investment properties personally.
  • How many investment properties have you closed in the last 12 months? Some agents only sell two or three properties each year. Even if all investments were characterized, there is insufficient repetition for the required process, experience and resources. A minimum of 12 investment properties per year is required to become an expert.
  • Did you or your client select the properties? This is an important question. Residential and investment friendly agents do not select properties. They send MLS data sheets for client requested properties. The client reviews the properties and selects one or more to make an offer. If you do all the work, the agent adds almost no value. Investment agents select potential properties and provide analytics. Reject the candidate if the client has selected the property.
  • What were your main selection criteria? This could be an early return, appreciation, tenant pool, or something else. You’re looking for an understandable answer based on analytics, not opinions or “feelings.”
  • Tell me about the tenant pool segment you target: Understanding the existence of tenant pool classes and their characteristics is not common knowledge. This requires a person with investment experience. If they do not have a comprehensible answer or do not understand the question, move on to the next candidate.
  • How did you estimate the fare and time? They should be able to explain the process like, “I look at comparable rents that have been rented recently.” Another good answer is that they work with the property manager who provides this information. If they answer that they use Zillow, Redfin, Rentometer, etc., they don’t know how to evaluate investment properties. I haven’t seen any real estate sites that provide usable rent or time estimates for specific properties. This is important information when you are evaluating investment properties.
  • Tell me about your renovation process: You’re looking for an answer like, “I work with the property manager to determine a list of renovation items. Next, I work with XXX Company to get a quote. Once Escrow closes, the renovation company does the work, and the property manager makes the final acceptance.
  • What else should I have asked you? This is an absolute golden question. I’ve learned a lot from asking this question at the end of interviews.

For example, I was checking out a neighborhood I didn’t know. Nothing seemed unusual or alarming. While walking around, I saw that a woman was sitting in the front porch. I talked to him for a while about the neighborhood. I was about to leave when I asked him, “Is there anything else I should have asked you?” His answer blew me away.

He told me that when two drug dealers lived on the street, and they occasionally shot at each other. One was sent to prison almost a year ago, and the rest of the drug dealers are silent on the matter. I saw nothing to indicate the presence of drug dealing, and if I hadn’t asked “what else?” Question

If the candidate answers all the questions satisfactorily, you can be reasonably assured that they know what they are doing.

Final thoughts

Ask the right interview questions to determine if the agent has the skills you need. Once you find an investment agent, that person will bring the team of people and resources you need.

However, like any company, the investment team will only work alongside the leader, which is you. You are still responsible for directing the team and making all major decisions.

Ready to succeed in real estate investing? Create a free BiggerPockets account to learn about investment strategies; Ask questions and get answers from our community of +2 million members. connect with investor-friendly agents; and much more.

Note via BiggerPockets: These are the opinions expressed by the author and do not necessarily represent the opinions of BiggerPockets.

Source link

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button