As a real-estate agent, it irks me when people gush about how buying real-estate through an agent is the ONLY way to go. The same goes for when real-estate investors give other people crap for purchasing an investment thru an agent. Neither is really better but it’s dependent on your time, appetite for risk, and real-estate experience. Here is a simply guide to helping you make the decision yourself and cut through the noise:
Buying a real-estate investment thru a real-estate agent is like going to Piggly Wiggly to buy a steak:
When you go to the store to buy a piece of steak, things are SUPER easy..
- Everything is labeled and pleasing to the eye
- SO MANY CHOICES “Do I want the organic chicken breasts? No, maybe I’ll try marinated pork.”
- You automatically assume that the steak isn’t rotted and can kill you. There are rules and regulations.
- Pick up your steak, check out, leave. No hassle and fuss.
- If you get home and the steak is bad. Take it back to Piggly Wiggly for a full refund.
- Buying a steak at the market costs more then finding your own cows to kill
- “I think I just saw my ex girlfriend” Interacting with people you don’t like
- Bad employees
- Market is jammed packed and lines are huge
Buying investment real-estate through a real-estate agent is very similar..
- All real-estate is correctly labeled with concise descriptions, beautiful pictures, and presented elegantly.
- So many choices. “Hmmm. Do I want the college rental with an %8 cap or do I want the Class B next to the hospital?“
- Property is GUARANTEED to be transferred with marketable title. No liens, hidden mortgages, or termites.
- Agent purchases property for you. Less fuss or hassle.
- A real-estate agents business depends or repeat business. If the property isn’t represented properly, there is recourse.
- Finding a real-estate agent that understands investments is difficult
- You pretty much have to have a full-blown relationship with a real-estate agent. You may be forced to work with someone that’s annoying.
- Not all real-estate agents are good and many sell junk investments to keep the lights on.
- Agents are paid from the seller, but in truth you are indirectly incurring some costs by hiring an agent
Buying an off market deal is like fishing for dinner.
- The thrill of the outdoors and having a hobby you enjoy doing
- It can be cheaper (if you take the time to get good at it)
- Bragging rights for catching that 10 pound bass
- Nature can kill you “Holy shit. That bear is looking at us.”
- Nature can be annoying “I forgot the Off spray and I stepped in poison ivy. This sucks. Let’s go home”
- You have to be REALLY good at fishing to make it economical. “You spent all day at the lake getting drunk and didn’t catch anything?”
Off Market Real-Estate Deals & Wholesaling
- Finding that once in a lifetime deal that could save tons of money
- Exotic deals (Sellers financing, sub2, lease options)
- The thrill of doing a real-estate deal on your own
- Having a reputation for real-estate success
- Being an attractant for lucrative real-estate deals and wealth building opputunties
- Prospecting, mailers, networking, learning can take years to find a deal. There’s way more work in prospecting and finding that deal.
- Could be dangerous “Wait…. The property has 4 liens on it!!!!!!!!!!????”
- It takes a long time to get good at finding deals.
- There’s not as much choice. That “once in a lifetime” deal may be 20 minutes from where you live or a property you’re not really that interested in.
- Real-estate investing attracts SO many con artists and is HIGHLY unregulated
- Caveat empor. “Buyer beware” You take a real-estate deal out of greed and the courts won’t have much sympathy for you.
- Takes time. Most people don’t have the patience to learn everything