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9 Vital Questions to Ask When Vetting Your Real Estate Investing Team | Black Kite Express

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

The most important member of the team is the investment agent

Investment agents are completely different from regular residential agents. That is how.

Residential agents

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

If the buyer wishes to make an offer, the agent facilitates the offer. If the offer is accepted, the agent facilitates the closing.

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

Investment agents

Investment agents help clients buy income streams, not homes. They need to understand financials, market trends, return on investment, and tenant demographics, and they are always part of a team.

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

  • Define the client’s financial objectives.
  • Develop a property profile that supports the client’s objectives.
  • Find conforming properties and generate analysis.
  • Conduct an on-site evaluation of properties of interest, including sending annotated video tours to the client and property manager.
  • Get the property manager’s property evaluation based on the video, including estimated rent, rental length, and recommended renovation items.
  • Calculate the renovation cost based on the property manager’s recommendation.
  • Recommend price and offer conditions.
  • Manage due diligence, including inspections and in-person walk-throughs for property managers.
  • Get quotes for all renovation items.
  • Overwatch renewal after close of escrow.
  • Facilitate property manager acquisition and listing of rentals.

Food to go

Investment agents and their team members provide a wide range of services, including property screening, property analysis (not MLS data sheets), validation, renovation management, and more. These are services of great value for investors.

Qualify an investment agent

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

Some residential agents occasionally sell real estate that is converted into rental properties. However, the client selects the properties and brings all the investment skills. The residential agent generally does not provide services beyond those necessary for home buyers.

Interview questions

How can you distinguish an investment agent from others? Asking the right questions in the interview.

Before interviewing candidates, write a list of 10 questions or less; You won’t have time for more. Ask each candidate the same questions and write down each answer to compare later.

Here are sample questions, along with acceptable answers. Will you find a candidate with the “right” answer to every question? Probably not, but make sure they provide reasonable answers.

  • Tell me about your investment team: You are looking for an answer like: “I have worked with X property manager for years. We have completed X properties” or “I work with several renovation companies…” They have no value to you if they are not part of an investment team. Move on to the next candidate.
  • Do you have investment properties? I would reject the candidate if they have not personally owned investment properties.
  • How many investment properties have you closed in the last 12 months? Some agents only sell two or three properties a year. Even if they were all investment properties, there is not enough repetition of the processes, experience and resources required. A minimum of 12 investment properties per year is necessary to be proficient.
  • Did you or your client select the properties? This is an important question. Residential and investment-friendly agents do not choose properties. They send MLS data sheets of the properties requested by the client. The client evaluates the properties and selects one or more to make an offer. The agent adds almost no value if you do all the work. Investment agents select potential properties and provide analysis. Reject the candidate if the client selected the property.
  • What were your main selection criteria? It could be initial yield, appreciation, tenant pool, or anything else. You’re looking for a plausible answer based on analysis, not opinions or “feelings.”
  • Tell me about the segment of the tenant group you are targeting: Understanding the existence of tenant group segments and their characteristics is not common knowledge. A person with investment experience is required. If they don’t have a plausible answer or don’t understand the question, move on to the next candidate.
  • How did you calculate the rent and time to rent? They should be able to describe a process like: “I look at recently rented comparable rentals.” Another good answer is that they work with a property manager who provides them with this information. If they answer that they use Zillow, Redfin, Rentometer, etc., they don’t know how to evaluate investment properties. No real estate site I’ve seen provides usable rental or rental time estimates for specific properties. This is essential information when evaluating investment properties.
  • Tell me about your renovation process: You’re looking for an answer like: “I’m working with the property manager to determine a list of renovation items. I then 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.” Renewal is a critical success factor.
  • What else should I have asked you? This is an absolute golden question. I have learned a lot by asking this question at the end of interviews.

For example, I was visiting a neighborhood I didn’t know. Nothing seemed unusual or worrying. As I was walking, I saw a woman sitting on her porch. I talked to her about the neighborhood for a while. She was about to leave when I asked her, “Is there anything else I should have asked you?” Her response stunned me.

He told me that when two drug dealers lived on the street and from time to time they would shoot each other. One was sent to prison about a year ago and the remaining drug dealer is keeping things quiet. I didn’t see anything that indicated the presence of drug trafficking and I wouldn’t have known if he hadn’t asked “what else?” ask.

If the candidate has answered all the questions satisfactorily, you are reasonably certain that he or she knows what he or she is doing.

Final thoughts

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

However, as in any company, the investment team will only perform as well as the leader, which is you. You are still responsible for leading the team and making all important decisions.

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

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

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