Finding real estate deals is the most important part of real estate investing — and that isn’t an exaggeration. Everything you do is tied to this first act. There are no tenants to manage, no contractors to hire, and no financials to crunch without deal prospects. In fact, buying an otherwise good property can be a bad investment when it’s bought at a bad price.
And it’s a numbers game. The more properties you look over, the higher the chances of landing a good deal. Now, you certainly could do it yourself. As a matter of fact, you should know how to spot a good deal yourself. But with a suggested ratio of 100:1 (i.e., you close 1 property out of 100 properties examined), having deal finders is a wise choice.
Real estate agents and brokers have large networks that magnify your reach. They filter deals based on your investment criteria. And they manage the transaction’s paperwork and relationships.
But not all deal finders are created equal. Some will understand the needs of an investor more than others. So filtering your agents or brokers will be an important step that’s tackled in this post.
(I will occasionally refer to both real estate agents and brokers as realtors or agents.)
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There are no good deals
I promise you I get it. I empathize. Once you’ve learned about number crunching, and what makes a good deal, it seems like every prospect isn’t a good deal.
For instance, have you tried buying a condo unit from a developer via bank financing? It doesn’t cash flow positively, right? Or how about foreclosed properties… when you consider the rehab costs, do they yield favorable results? Probably not.
And this is where most “investors” stop looking and give up. There are apparently no good deals and it seems like a huge time waster.
But really, how many properties have you looked into? How many passed your criteria and how many offers did you make? Remain persistent and you’re likely going to find a deal.
Real estate agents and brokers effectively augment the number of properties you filter into your funnel. In other words, they effectively increase the number of properties you’re able to check.
Why real estate agents and brokers are important partners
A real estate agent, broker, or some other deal finder, will help you find good deals, of course. But having them onboard has many other advantages. They know the market they operate (demographics, patterns, etc.); help you find the other players you’ll need when investing; enable you to accumulate more properties as an investor.
Real estate agents and brokers find you deals
Finding real estate deals can come in many ways. But hiring/partnering with an agent is still the most popular means. Plain and simple, they will have access to a database of listings. They also drive around and typically have first knowledge of any owner who’d like to sell. This last point is especially important because listed properties have lots of eyes on them. You’re chances of finding a good deal decrease.
(Even in countries with disjointed databases, as in an MLS that’s not fully integrated, a full-time agent or broker will likely have more listings to show than you.)
Real estate agents and brokers know the market
A good real estate agent or broker will also know a lot about the demographics and growth trends of the place you’re buying. This is incredibly useful information when buying a property.
For example, are tenants working stable jobs at stable companies? What’s the average size of the family and how many bedrooms do they expect? Is it the next growth area?
This knowledge is especially important when you’re investing in unfamiliar territory, and is highlighted in David Greene’s book, Long-Distance Real Estate Investing.
But I’d also say it helps to see things from different perspectives. So even markets you’re familiar with, fresh sets of eyes help.
Real estate agents and brokers help you find other people
A deal finder will have people they enjoy working with — from contractors to property managers. Greene’s book also mentions lenders. These people not only help you transform the potentially good deals into actual properties in your portfolio, but they also help you achieve the next point.
Accumulating more properties
I’ve said this ad nauseam on freedom locker PH, but I feel it’s worth saying again. No one gets rich off of one property. It takes multiple properties accumulated over time.
Your real estate agents, brokers, and the players they bring in, bolster your chances of accumulating properties. Their interests align with yours. They want you to accumulate more properties because it benefits them. And that synergistic alignment in interests is something you can (should) take advantage of.
(Related: List of articles on accumulating more properties)
Not limited to agents and brokers
The Real Estate Service Act of the Philippines (RA 9646) prohibits the unauthorized practice of real estate services. But real estate deals can be found through other people. Deal-finding isn’t limited to real estate agents and brokers.
Try going online or driving around the neighborhood you’d like to invest in. Get to know the people. You’ll be surprised at the opportunities this brings.
But remember that real estate agents not only find properties, they also manage the transaction — so it still makes sense to build a relationship with them.
What to look for in a real estate agent or broker
Finding real estate deals through a real estate agent or broker will necessarily be about the quality of work they’re able to provide. Not every agent or broker will understand the needs of an investor. For example, investors care less about how nice the property looks to them. Instead, they care more about how the property looks to their potential tenants or buyers. There’s a huge difference between the two.
So to screen your deal-finder, consider asking the following questions.
- Are they part-time or full-time realtors?
- Do they work on a specific niche?
- How many transactions have they done in the last 12 months?
- Do they have a team of agents?
In a nutshell, find high-producing full-time agents that focus on the niche you’re targeting.
(Related: Why You Need to Find Your Real Estate Niche for Massive Growth)
Listen carefully to their answers. Specifically explore answers to WHY they made certain decisions rather than WHAT (i.e., credentials) they’ve done.
But also understand that there’s a tradeoff between highly responsive realtors and the high-producing ones. The most successful real estate agents and brokers will be extremely busy.
Conclusion
Finding real estate deals is a numbers game. And that, to me, is a very important reason for having real estate agents and brokers on your team. But I don’t want to discount the fact that they bring much more than just deals. Managing the transaction, networking with people they know, and greater insights into a niche are just some of the advantages of having agent/broker friends.
It ultimately is a strategic partnership. They benefit when you buy, and you (hopefully) benefit when you buy. Find the right realtor, and the promise of accumulating more properties is that much closer.
*This post may contain affiliate links. You can read my affiliate disclosure here, Terms & Conditions, #6 Links.
