What to look for in a broker when buying investment property

[scottish007]

Hello All!

What should I look for in a broker to assist with the purchase of investment property? From a broker perspective, does it even matter that it will be an investment property and not my residence?

Also, in my previous primary residency purchases, I asked the broker for a referral to a mortgage broker / lending entity. For the most part, I was happy with the referrals I received. For an investment, for any reason would it be better to arrange financing independently, or prior to contacting a broker?

Your help is truly appreciated.

Scottish007

[agentpeter]

Scottish007 -

You should find a broker that knows your market and knows how to find good investment properties. A Brokers job is to work in your best interest to find a property that meets your needs whether it's an investment or not.

Definitely talk with a mortgage broker before you start looking at properties and get pre-approved. Financing for a non-owner occupied property is different than your primary residence.

Tell us more.... Where do you live? Are you looking for a rental property? Are you looking for a fix/flip? What investment experience do you have?

-Peter

[JimOlenbush]

Lots of Realtors focus on owner occupants and don't really understand the needs of the investors. Others specialize in investments and dread picky owner occupants. The two types of buyers really do have very different needs.

One good test is asking about the broker's experience with their own investment properties. If they have never owned any investment properties then they may not be as knowledgeable as another broker who is actively investing themselves.

For the lenders - the loans are different and some mortgage people are more knowledgeable about investor loans than others. It doesn't hurt to visit with several loan officers before picking one to go with.

[agentpeter]

Jim -

Those are some excellent thoughts. I completely agree that if you are going to depend on your agent's advice to find a good investment; he/she should have experience investing.

-Peter

[scottish007]

Great advice from everyone. Thank you for taking the time to post.

You confirmed some things I expected, and actually confirmed what some of the brokers/lenders I have talked appear to telling is important in their initial sales pitch to me. Again, thank you!

"Tell us more.... Where do you live? Are you looking for a rental property? Are you looking for a fix/flip? What investment experience do you have?

In answer to agentpeter, I live in Atlanta. I am currently looking at three markets - Atlanta, Florida and Scotland. In each market, I am looking for property that I can rent, break even month over month (may be earn a small profit), hold for 5 to 7 years and sell for a capital gain.

I will fix the property to the extent that it will support higher rental, or I personally feel that it needs to be fixed to rent a quality property. Yet, I do not plan on undertaking substantial construction, unless it really needs the work (see below).

I have no real estate investment experience, however, I have been meeting with lenders, property managment companies, brokers etc in Scotland during the last year and a half. I understand that market, therefore, I have just purchased my first investment property in Scotland. I will be conducting minor renovations and will rent beginning early August.

As for the US, I plan on building investment property portfolios on both sides of the Atlantic, hence the assessment of the Atlanta and Florida markets. I have already spent 18 months researching the Scottish market before I purchased my first property (I also grew up there). I do not anticipate taking that long to research the Atlanta or Florida markets, yet I want to prepare as best I can before I purchase.

[BuyHawkeye]

Just promise you won't target "break even" for rent in Atlanta. This is a target rich environment and you should be able to clear at least $200 over PITI/Expenses per month.

[scottish007]

Just promise you won't target "break even" for rent in Atlanta. This is a target rich environment and you should be able to clear at least $200 over PITI/Expenses per month.

Really?!? Wonderful. I loved to hear more. Which area and what size of property?

[BuyHawkeye]

Hmmm... Well at the end of the day I don't particularly care about anything other than the numbers. So to answer your questions about area and size: It depends.

That's it. I deal exclusively in Cobb County so I guess that will help narrow it down. Also, I am exclusively residential (though I don't care what kind).

I'm not sure what else to say as it would be a plug for my big brain and my time here in the real estate market . Our website offers the latest foreclosures that we pick up--auction is the day after tomorrow. Initially we offer them to investors, but neither of us has any patience so we launch right into rehab and then resale to the owner/occ market.

Our stuff is pretty quick paced and generally not for the faint of heart, that is probably why the deals are pretty good (high risk, high reward). Anyway, that is the stuff that I am referring to when I tell you that investment properties are readily available in our area that will be cash-flow positive out of the gate.

Disclaimer: I didn't say what shape they are in! That ranges from "bad" to "horrible" to "Will somebody PLEASE strike a match!"

[agentpeter]

David -

Are you buying these properties through the foreclosure auctions? Or do you buy them in the pre-foreclosure stage?

-Peter

[BuyHawkeye]

I don't do pre-foreclosure work (at least not very well). Yes. I buy at the monthly auction (tomorrow).