If you’ve read any of my other blog posts or looked at my background in real estate you likely know that I started out as a real estate investor. Early on when I was just getting my feet wet and I was looking for my first investments I needed the help of a Realtor to find properties but not knowing much I didn’t realize that when it came to investing using an agent with investment experience and knowledge would have been a huge help.
My first property was a little 3 bedroom house in Bonner Springs, Kansas. It was a foreclosure and I actually came across it from the MLS search my agent had given me. I didn’t really know much about investing at the time and really had no idea how to run numbers. I’d ask my agent questions like what do you think it will take to rehab this house? What work do you think it needs? Do you know any contractors that will do these repairs? What can we sell it for when it’s rehabbed? Sadly she couldn’t answer those questions very well and in hindsight I shouldn’t have expected her to be able to. Her background prior to becoming an agent was working as a dental assistant. She didn’t know much about the rehab process or what it meant to run numbers so that clients buying investments were buying profitable properties. That eventually became a problem as I moved on to my next property because once again I relied on her to help me decide if it was worth buying.
This property was another foreclosure but instead of being a small rehab, this one was going to be a complete gut job. It was going to have to be taken down to the studs. Before buying this one I asked her what it would sell for all fixed up. We talked about the costs of the rehab, and after hearing what she thought it would sell for I thought I was in for an easy payday. When she pulled comps she came back and told me she thought it would sell for 275K. Well, all I saw was dollar signs, so we made an offer and ended up getting the property. Long story short, we paid too much, put too much into the property, and ended up losing money on this investment. The house didn’t sell fast enough and I had to turn it into a rental, which wasn’t the greatest idea, because my exit plan on accounted for selling it. I couldn’t rent it for a high enough monthly amount to cover the mortgage and I ended up having to pay out of pocket for a couple of years until I found a buyer. My agent tried to sell it, but she didn’t really understand what I needed to happen
As the years went on I used a couple of other agents when buying properties and it was kind of the same thing. They were good at finding houses, good at selling houses, but when it came to helping me decide if the house was going to be a good rental, or a good flip, they really had no idea. So I ended up getting my license so that I could do all that myself.