The vast majority of people will use a real estate agent when selling their homes. Most will also use an agent when buying a house, especially first-time homebuyers. It can be critically important to use a Realtor when building a house. But what about when buying a rental property?
What are the most important things to look for when buying a rental property?
- The location of the property: The characteristics of a given location define everything about the projected performance of a rental property. An average-looking rental property in a highly profitable location is better than a great property in an unprofitable location. The present character of the location, as well as, possible future events should be factored in before buying the property.
- The cost of the property: The purchase price and possible rehabilitation cost of a rental home play a role in the eventual performance of the rental. There is no such thing as the right price for a rental property; the right price depends on the state of the housing market in the location where the property is. Buying an affordable home is only a good idea if the property can generate sufficient income.
- The expected cash flow from the property: The income-generating potential of a property is determined by location, price and its operational cost. Successful investment properties are identified before the purchase. Your success is created by the choices you make at the beginning, namely, the location you choose and the kind of property you buy.
Take great care during the initial stages when you are about to buy your rental property. Recognize that the small decisions you make during this period will continue to reverberate into the future and influence the performance of your property. Whatever affects the income from your property affects your success as a property investor.
Do you need a real estate agent to buy your rental property?
This is a question property investors ask a lot and one that you could be asking right now. Could it be that you view the estate agent as a cost rather than an investment?
This is actually a misnomer. Experts understand that buyers aren’t actually saving themselves money if they go it alone. Plus, you are not thinking of what the estate agent does for you and how this can affect the future of your business.
But what does a real estate agent actually do for you?
In the simplest explanation, an estate agent helps you to minimize risk. The agent does this by placing the wealth of their knowledge and massive network at your disposal. This greatly increases the probability that you will find a rental property that meets all of your investment criteria. Essentially, the estate agent makes it easier to succeed.
Real estate agents give you the gift of insider information. They help you know things about a location that you would not know unless you had spent a lot of time in the area’s housing market. By hiring an estate agent, you leapfrog this learning process.
You can act with the experience of someone who knows the area without investing the time to acquire that knowledge. An estate agent can be your best ally when buying rental properties.
Here are few reasons why this is true.
Why you need an estate agent when buying rental properties
1. Neighborhood Knowledge
The internet is a great tool for researching locations before buying a property. But the internet does not feel the pulse of a neighborhood. It cannot give you a true idea of what it feels like to live there.
On the other hand, estate agents traverse the neighborhood every day and have access to snippets of information that the internet cannot give you. They can inform you of upcoming events that will impact a neighborhood’s desirability.
2. Access to Privileged Information
All the time, there are houses that are for sale but aren’t listed on the internet. These will often include homes that are FSBO (for sale by owner) and homes that are undergoing renovation in readiness for being listed.
They also include homes that are locked behind real estate agent networks. These networks are not accessible to the public. But some of the best deals can be found inside them. Estate agents can help you access this information.
3. Negotiate the Best Terms
Even if you make a living from negotiating deals, your area of expertise is probably not in negotiating houses. There are things you pick up from doing something repeatedly and those are the things that distinguish the pro.
When buying a rental property you may simply be focused on negotiating a lower sales price for the home. But an expert Realtor will try to negotiate terms that will have a greater impact on the performance of the rental property.
4. Connect You with the Best Professionals
Real estate agents have extensive knowledge of the entire rental property ecosystem. This includes access to professionals you need for the successful operation of your property. The agent can connect you with the best home inspectors, handymen, lawyers, accountants, and property managers in the area.
They can make your experience of managing the property a lot easier. They also have intimate knowledge of local regulations that can help speed up the paperwork for the property.