Do you want to know one of the biggest secrets to becoming a successful real estate investor in Kansas City?
Being a successful investor isn’t about using the latest trends in your flips. Being the best marketer for your rentals. Or even choosing the absolute best price when you rent or sell.
The secret to being a successful investor in Kansas City is buying the right investment property.
We all know that real estate investing is a numbers game that you win or lose when you decide on an investment property to purchase.
Real estate investing can be like gambling in a way. If you plan to flip a home you’re betting that you’ll be able to sell it for much more than you paid for the house and all of the repairs. If you’re planning to rent out the home, you’re betting that the rent will be enough to cover all of the monthly expenses and give you some cash flow when it’s all said and done.
In both of these situations its vital that you buy the property at the right price if you want to stack the odds in your favor.
How do you stack the odds in your favor? You hire an investor-friendly real estate agent in Kansas City.
What is an investor-friendly real estate agent?
An investor friendly agent is an agent that has a good understanding of everything that goes into real estate investing. The agent understands how to run the numbers, understands cap rate, ARV, ROI, and tax implications of investing, and biggest of all– how to find the right Kansas City investment properties.
How can working with an investor friendly agent in Kansas City benefit you?
There are a lot of great real estate agents in Kansas City. When it comes to investing your hard earned money into a property it’s not enough to have someone that’s just a good agent.
If you’re going to invest, you need an agent that has experience investing in real estate. The best investor friendly agents have experience investing themselves. This experience is important because they have been in your shoes. They’ve run the numbers themselves and know the difference between a good and a bad investment.
Below are a few reasons why you should hire and investor friendly agent in Kansas City.
1. An investor friendly agent in Kansas City can help you find the right properties.
Every licensed agent in Kansas City has access to the MLS, but if you take even five minutes looking at what’s out there you’ll soon see that most agents don’t have a clue what makes about what makes a great investment.
Investors need agents to know what neighborhoods work best for flipping homes. They need to know where properties are appreciating, what buyers are looking for, and have a feel for the trends that are likely to help sell.
An investor-friendly agent in Kansas City can help you pull comps that will help you determine the ARV or after repair value of a property. An investor friendly agent isn’t just looking at sold comps. Agents with investing experience know that ARV needs comps that have recently been updated. This gives you a better picture of what a potential flip could sell for after all the repairs and updates have been made.
ARV is very important to investors. ARV helps you determine how much you should be able to sell your investment for once it’s fixed up. This is important because you can use it to help you calculate your potential return. After you know your potential return then you can determine what you can afford to pay for the property and updates while still profiting from your investment.
Investor friendly agents in Kansas City are also a huge benefit for buy and hold investors. Agents that work with investors understand the market and what homes are renting for in certain neighborhoods. This helps investors determine what you can afford in monthly mortgage payments so that you know if the rent will cover your expenses and still provide you with cash flow.
2. Give you access to more properties
A good investor friendly agent in Kansas City not only gives you access to properties on the MLS they are actively working to find off market properties. Investor friendly agents should have multiple sources to help them find “good deals”. Agents should work with wholesalers who are out there daily knocking on doors and advertising trying to find owners that want to sell their homes quickly. Many homeowners prefer to work with investors because investors can help them when they have a home they need to get rid of. Plus they like working with investors because investors often use cash. Working with an agent that brings you unlisted properties can make investing more profitable because you’re not needing to outbid other investors.
3. Assist you in calculating your potential ROI
Another big benefit of working with an investor friendly agent in Kansas City, is that the agent can help you with the ROI on your investment. For example, let’s say you are shooting for a 20% return. One of the first things you’ll do is determine the ARV of the property. The agent will gather all of the comps of nearby properties, then multiply that by 80%. This number will tell you the price you can pay for a property in that neighborhood, minus the amount you’ve determined the property needs for repairs and updates.
If the ARV of the property comes back at $200,000 for recently updated and sold homes in that area, then the most you would want to pay all in is $160,000. Keep in mind that you should always subtract the repairs needed off of that 80% number. If you do that you stand a much greater chance of getting your ROI.
Most investors in the Kansas City area are shooting for a higher number than a 20% ROI. Many of them try for 30% just to account for those unexpected problems that always pop up on flips. You’ve probably read about this rule at some point. Many investors call this the 70% rule.
Rental property calculations are a bit more complex. When running the numbers on a rental you have to take into account a lot more information. You need to calculate all of the annual expenses, like taxes, property management, and maintenance. You also need to look at factors like the monthly rental income as well as property appreciation.
Your agent should be able to help you run these numbers when looking at rentals. ROI on rentals is extremely important and if you’re going to be successful in this business your numbers have to work.
How do you find an investor-friendly agent in Kansas City to work with?
Finding an investor friendly agent is important, unfortunately it’s not always easy. Many agents will say they are investor friendly but that doesn’t mean they have a clue what they are talking about when it comes to investing. So how do you determine if an agent will be good for you and your business?
What questions should you ask an agent before you work with them?
- What experience do you have working with investors?
- Do you have experience working with out of state investors?
- Do you have investing experience?
- How do you find profitable investments?
- Do you have recommendations for contractors, property managers?
- Do you have neighborhoods that you’d recommend that has property that would fit my investment strategy?
These questions won’t cover everything but they will give you a good glimpse into the ways that a potential agent could help you and the experience they have.