I had a great time speaking to investors of all levels in the Central Arkansas Real Estate Investor Association (CARREIA). We over current national and local market data, real estate trends and what economic indicators to look for over the next year. I will be highlighting a few of the questions and the discussions that followed and will link those up here. If you are thinking about investing in real estate, I strongly suggest that you checkout your local investment clubs. Most clubs (ours included) have a mix of experienced and new investors of all levels and various investing interest.
Q: How can we create a mutually beneficial relationship?
A: Set clear expectations upfront.
The Investor wants a "deal" on everything, including information that only Realtors can provide. The Real Estate Agent is afraid of working for free (which is not sustainable). Usually when I get asked this question, the investor is looking for me to provide a list of foreclosures, owner names, out of state owners, or corporate owned properties. Or the investor would like for me to provide a full comparative market analysis on a property they are considering investing in. There are a few ways to make this relationship work.
Pay the agent for an opinion of market value. A true comparative market analysis / broker price opinion will take several hours to produce. Banks, corporations, and investors usually pay $200 to $250 for our full report which includes all market activity and a summation of comparable properties and other properties on the market. It may be from 30 to 80+ pages depending on the number of properties in the area and includes a 2 page summary.
Why can't we do this for FREE? In short, an accurate CMA takes too much time. There are some agents who would agree to provide unlimited free CMA's to investors. These agents usually are paid around $30 for their price opinions by banks and corporations who pay us $200+. The difference is the research and the accuracy of information that we are able to provide our clients.
Hire the agent to represent you in the purchase of properties that they send you. Some of our investors have a 1 year contract with us that allows them to use any other agent to purchase any other homes in any areas, but they agree to allow us to represent them in the purchase of homes that we have sent or shown them. Due to our superior service and support for investors, most like sign a 1 year "Exclusive Buyers Agency Agreement" which means that they want to use us for any real estate purchases they make in central Arkansas. Why would an investor agree to buy through us exclusively? We have demonstrated to our clients that we are able to save them money by avoiding bad investment decisions and negotiate to save them more money when they make purchases with representation and a talented negotiator. An exclusive agency agreement also allows us the confidence to provide our investors with all of the information, market data, and analysis they need to make a decision, for free.
Q: How do we analyze an investment opportunity ourselves?
A: Know your investment goals and the criteria/conditions that will be necessary to take you there.
We have put together an Investment Criteria Worksheet that ask several questions about what type of properties you are looking for and will ask you some questions that you may or may not have thought through. Every investor is different and your investment goals and targets are different, however, writing them down, putting them on paper, and keeping them in front of you will enable you to analyze an investment and quickly make decisions. "Analysis paralysis" is the number one killer of good deals. If you fill out the Investment Criteria Worksheet, we will be able to locate properties for you that match what you are looking for and even find properties that are not currently on the market.
Q: What books and resources would I suggest to Investors?
A: Here are my favorite Investor Resources
- Census Explorer - Economic, Demographic, and Household data for the United States.
- Real Estate Data - Arkansas Realtors Association Housing Market Reports
- Discussion Forums - Bigger Pockets is one of the largest online networks of real estate investors. They also have a pretty good and entertaining podcast.
- Local Forums - CARREIA is the best group in town for real state investors, hands down!
- Books - There are many "Make Money In Real Estate" books and I have read many of them. Below are my favorites! They will deal directly with practical real estate investing or overall philosophy of real estate investing.