In addition to being a low-risk investment, real estate allows investors to make money both in the short-run (in the form of rental income) and the long term (as appreciation). However, starting a real estate investing venture sounds intimidating for the majority of people with no previous experience.
After all, buying a real estate property is the largest financial transaction in the lifetime of most people. Thus, new investors are highly advised to work with an agent when taking their first steps in flipping a house for the first time.
Here are the 8 most important benefits of buying investment properties with the help of a real estate agent:
Expertise on the Local Market
Excellent real estate agents have been doing daily deals for years or even decades, and they are familiar with the local real estate market and local rental market to an extent that you cannot achieve with some basic research and online learning.
An agent will be able to direct you towards the best neighborhoods and the best property types for real estate investing right away. Moreover, he or she will advise you on the fair market value of homes in your area and assure that you don’t overpay when buying an investment property. Paying the right price is of crucial importance for profitable rental property investing.
Do remember when choosing an agent there is a difference between a REALTOR® and a real estate agent.
Access to MLS Listings
Working with a real estate agent will be of indispensable help during the property search stage as well. Looking through real estate websites, checking out local newspapers, and driving around to find “For Sale” signs is not always enough to make a profitable real estate investing move.
As an investor who does not have a real estate license, you are missing on a major source of real estate listings: the Multiple Listing Service, or the MLS for short. That’s where the majority of properties for sale get listed, and only agents and brokers have access to this nationwide database. So, hiring an agent will give you access to hundreds of more properties to choose from in your housing market.
If you are working with a well connected local agent you might even find a pocket listing that the public has not been informed about yet. This is one of the many benefits of forming an excellent relationship with an agent who is connected locally.
Real Estate Analysis
Investing in real estate is associated with different types of analysis. For example, one of the first steps in this process is conducting comparative market analysis (CMA). This means that you have to find a number of real estate comparables, or real estate comps (properties similar to the one you are planning to buy), which sold in the past few weeks in order to establish the current market value of this type of homes. As you can imagine, finding the necessary data and making the needed calculations can take weeks or even months from a non-professional.
In addition, once you’ve identified some properties which match your budget and other criteria, you need to perform investment property analysis on each one of them to see what rental income, rental expenses, occupancy rate, and ultimately return on investment you can expect from each one of them. This is the only way to buy positive cash flow properties with a high return.
Your real estate agent will be able to help you with all these types of analysis to save you time and assure that you buy the best deal before someone else snatches it.
Out of State Investing
Most first-time investors tend to focus on their local market because of their natural familiarity with it and because of the hardships associated with researching another market and visiting properties for sale in it. This makes real estate investing virtually impossible for regular people living in overpriced markets such as New York, San Francisco, Boston, Los Angeles, and others.
The same holds true for those living in markets with no rental demand. This challenge can be easily resolved by hiring a real estate agent. Working with an agent makes out of state real estate investing a feasible option and thus gives just about everyone the opportunity to buy a rental property, regardless of his/her location.
Help with Financing
Real estate agents are experts on all aspects of the local real estate industry, including lenders and financiers. They will be able to provide you with advice on the best financing options for your particular situation and to recommend local lenders who offer optimal interest rates and loan terms.
Furthermore, your agent will help you prepare all documents that you need to get pre-approved for a mortgage if that’s your preferred financing method even before looking for properties.
Being pre-approved makes you look like a more credible buyer in the eyes of sellers and gives you an advantage over homebuyers and other investors. This is particularly important in a seller’s market where the number of property buyers exceeds the number of properties for sale, so listings disappear quickly.
Real Estate Network
A real estate agent comes with an entire network of various real estate professionals. When buying an investment property, you need a lot of real estate experts such as a lender (discussed above), a home inspector, an appraiser, a real estate attorney, and even a property manager if you are aiming for passive rental income.
Finding all these professionals is not only time-consuming, but you are not guaranteed to find good ones who will provide you with their services in a timely manner and for a reasonable price.
Alternatively, if you hire an agent, you will get immediate access to a wide real estate networking including these professionals and many more. In addition, you will be able to get discounted rates through your real estate agent as he/she is doing repeat business with these people.
As a beginner real estate investor, you stand no chance against the seller’s agent. Most homeowners resort to the services of real estate agents to help them market and sell their property. Agents are professional negotiators with years of experience in this science, so you need a buyer’s agent to match your counterpart’s skills.
Your agent will negotiate both the best price and the optimal terms and conditions on your behalf. This means that you will walk out of the deal with the best investment property in which your money could get you in the local market and with maximized return on investment.
Closing the Deal
Last but not least, your real estate agent will tackle all the legal formalities of closing the deal once you choose a property and agree on a price with the sellers. Unless you’ve already dealt with real estate transactions, it’s hard to imagine how much time and effort is required to close a deal, especially for someone with no previous experience.
Closing the deal quickly and efficiently means that you will become the owner of your first investment property and start renting it out sooner rather than later. At the end of the day, this means that you will begin to make money from real estate investing faster.
Real estate investing doesn’t have to be stressful and traumatic, even for beginners. On the contrary, it can be a very exciting way of making extra money and gaining financial independence from your 9-to-5 job. For this to happen, you just have to rely on the right professionals, and the most important of these professionals is your real estate agent.
Hiring an agent to help you buy investment property comes with many advantages, especially for first-time investors. So, don’t put more pressure on yourself than needed, and look for the top-performing agents in your area to help you start your real estate investing business.
Other Excellent Huliq Real Estate Resources
What to know about iBuyers - have you heard the term iBuyer and wondered what it meant. iBuyers are actually a type of real estate investor. If you are going to be buying or selling a home you should have an understanding of the iBuyer concept.
How to build wealth with rental property - if you are just getting into real estate investing take a look at some of the outstanding tips on creating sustainable wealth. By following the advice, you'll put yourself in a better position as a first-time real estate investor.
Use these resources to become more knowledgable as a real estate investor.
About the author: The above article on why an investor should buy through a real estate agent was written by Daniela Andreevska. Daniela is the Marketing Director at Mashvisor, a real estate analytics tool that helps real estate investors quickly find traditional and Airbnb investment properties. A research process that’s usually 3 months now can take 15 minutes. We provide all the real estate information in easy to understand visualizations.