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Friday, July 17, 2009

Do You Have a Realtor in the Family?

by Barbara Broyles

Almost everyone has a friend, cousin, brother, sister, or uncle that holds a real estate license. But real estate transactions are much more than a simple relationship business. Especially when it comes to building a real estate investment portfolio.

Is that family member or acquaintance really who you want to trust with your financial future?

Unfortunately, most people don’t understand the true significance of a good agent. Obtaining a license is not that difficult, but keeping up with market trends and truly studying the financial end of real estate is very complicated.

Why it matters
Right now, the feeding frenzy is at the bottom of this market - meaning the lowest priced homes - and homes can be purchased as low as $40,000.

Does that make it a deal? While it sounds reasonable and smart, buying low is only a fraction of the equation when it comes to owning investment properties.

What if it takes six months or more to get that home rented?

Will you get the kind of tenants that you really want in a home that is in a low priced, low rent neighborhood?

How often will you have evictions?

What kind of rehab work will you have every time a tenant moves out?

These kinds of questions are essential, and ones that the right real estate agent should be helping you ask AND answer.

Selecting an agent
Investing in Real Estate is not a one-size fits all, and the right agent should require a detailed consultation to learn about your needs, your finances, and many other issues. Your portfolio should be as individualized as which home you choose to live in.

You should be asking about things like Return on Investment, Cash on Cash Returns, Cash Flow, Appreciation Rates - not focusing on how cheap a house is.

The bottom line is that your Realtor(r) or agent should be your guide to the right investment home, not someone who will just write a contract on a low price home then leave you to figure out the rest.

071709 © Barbara Broyles, HomeLovers

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