This week’s show is the third in a series on real estate investing. First, we discussed how to prepare your finances for real estate investing. Next, we discussed various approaches to real estate investing, plus how to assemble your real estate investing team. Today, we’re focusing on two members of your real estate team—the real estate agent and property manager—including how to pick them and what to look out for.
There is no shortage of real estate agents in Colorado Springs, which is both good and bad news when searching for one. It means you can be as discerning and selective as you want, though the sheer number of choices can be overwhelming. Your first step is to research your options, utilizing any and all resources at your disposal. Your friends, family, and business associates can prove to be excellent referral sources, though you should be cautious about enlisting anyone you know personally to be your agent. Beyond this, the Internet is an incredible resource, allowing you to both gather a list of potential agents and also, through services like Angie’s List and Google reviews, pre-screen them based on past client reviews.
As mentioned on last week’s show, the single most important factor when choosing an agent is trust; you need find an individual that prioritizes your interests first and foremost. Although buying an investment property is a major life decision for you and your family, you are, unfortunately, just another transaction for most agents. For many agents, their biggest concern is finding a house and getting it closed as quickly as possible. And, of course, since agents are paid on commission, many are inclined to push their buyers toward properties they can’t necessarily afford. A great agent will show ambition, patience, and understanding throughout the transaction. And, ideally, they will be real estate investors themselves and can offer their own advice and insights into your transaction.
As you’re researching real estate agents, it’s a good idea to also begin researching property managers—that is, assuming you’ve decided to use one. If you have, it’s best to get an early start on finding an ideal management company. Even though you’ll buy the property first, the property manager will play the more significant role throughout the life of the investment.
The property management company is responsible for the daily operations of the property: they find tenants, manage leases, handle repairs, and keep up the property. They are the face of your property, and the quality of the company will determine the quality of tenants. As you acquire more properties, it is necessary to trust the management company with more and more responsibilities; it’s simply impossible to grow as an investor while handling the minutia of property ownership. The property should ideally run itself with little to no input from you. Unfortunately, this means problems with the property could take months to become apparent to you, the owner. Bad management companies will invoice for work and materials on repairs that were never performed, or let occupancy rates drop substantially without remedying it.
This covers just two members of your real estate agent team. Next week, we’ll continue with others. There were, as always, details covered on the air that couldn’t fit into the blog, so I encourage you to check out the show. And stay tuned next week as we continue with the next installment in this series on investment property ownership.
8-30-2014 Come With Me Now! Building the Team Part V
8-30-2014 Come With Me Now! Building the Team Part VI