This is the next post in my series on investing in multi-family properties in the Dayton, Ohio area. My last article discussed the various pros and cons of investing in an A or B class property versus a C or D class property. In this article, I will discuss how to select a real estate agent. Many investors, who are looking for a Realtor, are from out of state and cannot rely on a referral, thus they have to rely on the internet to find an agent. Not all agents have the knowledge or desire to work in the investment space. This article will discuss the specialized knowledge an agent needs, and how they can best assist out of state investors.
Dayton Realtors Working with Investors Need To Understand The Factors That Go Into A Purchasing Decision
Buyers focused on finding a home to live in look for very different qualities in their realtor than an investor. Buyers looking for their “dream home” frequently care about issues such as layout, the style of the house, square footage, cosmetic details, modern upgrades to the property, and an intangible “feeling.” Home buyers need to fall in love with a property in order to make a decision. On the flip side, investors should not become emotionally attached to a property. Falling in love with a building can cloud judgement regarding whether or not it is a smart buy. Investors are generally more concerned with the math of an investment. They need to consider market rents, property expenses including property tax, lawn care, and maintenance, vacancy rates, any deferred maintenance a property needs, and the purchase price. A real estate agent who is working with an investor needs to understand these needs in order to suggest viable properties.
Many property investors seek to purchase real estate outside of the state or city in which they live. Dayton realtors need to provide a way to help investors vet a property when the buyer is unable to view it themselves. I frequently will go take photos or video of a property for an investor, or am able to do Facetime or Zoom calls, so that they can virtually walk through a property. I also pay attention to items that will need repaired or replaced, such as roof condition, siding condition, basement moisture, age of HVAC and water heater, age of windows, etc. I also direct investors to information regarding the Dayton area so they can get a better idea of the various areas they are thinking of investing in. Finally, I request rent rolls, profit and loss statements, and any other financial information required to make an initial decision on a property.
Dayton Realtors Must Protect Their Buyers From Tenant Complications During Escrow Period
Once a property is under contract, there are a lot of moving parts and contingencies that must be met. For a normal property purchased for a homeowner, the three major components are securing a mortgage, going through the inspection and negotiating repairs, and the appraisal. Multi-family investment properties have several other issues that must be considered both during the escrow period and prior to writing the contract. Most multi-family properties will have tenants living in the property, meaning the investor will “inherit” the seller’s tenants. It is important that a Realtor protect a buyer from legal issues that could go wrong. In the original contract, it is important to have a clause that requires the seller to produce copies of all leases, to ensure all tenants have proper legal contracts. It is also important to verify rents, and ensure that all security deposits will be transferred to the new buyer.
During the escrow period, it is possible for a tenant’s situation to change. Tenants may miss a rent payment, unexpectedly move out, or unexpectedly need to be evicted. The larger the multi-family unit is, the higher the chance that a tenant can cause a complication. Real estate agents can protect their buyers by having an extensive contingency, signed by both the buying and the selling party. This contingency can require that the seller disclose any violations of leases or changes to vacancy during the escrow period.
Purchasing an investment property involves many more moving parts and areas that can go wrong than a normal home. If a real estate agent does not routinely work with investors they may be unaware of the variety of issues that should be considered while writing the purchase contract and when in the escrow period. If you are considering purchasing a Dayton multi-family unit then contact me today to speak with a real estate agent. I strive to provide the highest level of service and make my clients a priority. I look forward to speaking with you. I also service the areas of Beavercreek, Centerville, Cincinnati, Clayton, Englewood, Oakwood, Fairborn, Harrison Township, Huber Heights, Kettering, Miami Township, Miamisburg, Riverside, Springboro, Trotwood, Vandalia, Washington Township, West Carrollton, and Xenia.
Note: Nothing in this article, or on this website should be construed as investment or financial advice. The opinions shared on this website are the personal, and not professional, opinion of the author and are not associated with Keller Williams Advantage. Any investment decisions should be made after consulting with a certified financial/investment professional.