Questions to Ask a Real Estate Agent When Investing in Property
The main purpose of any type of investment is to yield the best possible return and generate cash flow overtime with the minimum risk taken. People earn and save and later on they invest in assets to get an outcome that will remain backup support for the unpredictable future. Usually, people tend to invest their money into different sectors where the maximum yield can be promised. In this era, broad-ranging possibilities are available for potential investors to opt for including stock markets, bonds, fixed deposits, mutual funds, shareholding, real estate, etc. However, it is not possible for all types of investment to provide the security of best return. In fact, some investments require a high amount of risk with a gamble of either best or worst outcome. If you are new to investing, it is necessary to play safe and go for a secure option so that you don’t have to lose your hard-earned money if caught in the middle of a socio-economic catastrophe. Taking all the factors into account, investing in real estate can be considered one of the best ways to invest, not just in our country but all over the world.
Buying investment properties is far more than just buying your home. Real estate investments can be quite a tricky business and if not played cautiously, you might end up facing great loss. If you are a newbie, it is highly recommended to go for hiring a real estate agent rather than trying to do everything on your own. Even if you are involved in this business for a long, it is still safe to take help from an agent for grabbing the best deals available in the market.
So, you are finally ready to invest and have already chosen a real estate agent. The next step is to properly gather detailed information from your agent about the service he will provide and how your investment process will go on. Your inquiries can reveal how suitable your real estate agent is for your job and how you will succeed in this business. This article aims to inform you of the key questions you should ask your real estate agent when buying investment properties.
Top Questions to Ask a Real Estate Agent When You’re Investing
1. What specifications distinguish you from your competitors?
Ask this question to your real estate agent to test how confident he/she is about the job. With the booming of the real estate industry, uncountable real estate agencies are mushrooming at a vigorous rate. So, even if you did your research while selecting your real estate agent, it is important to recheck if you are proceeding with the best possible service.
So, ask your agents about their experiences, the challenges they faced in the past, and how long they are in this business in comparison to their competitors. If the answer is a ‘no’, that they haven’t been in this business for long in comparison to average agents, then assess how many challenging deals they have done so far. If their portfolio shows no promising indications, then it is wise to opt for someone else who has had more experience in this field or has handled some magnificent deals.
2. What is your standard procedure for searching for a property that aligns with my investment vision?
Before investing in real estate, it is necessary for you to set a goal and narrow down an investment strategy according to your needs. Then discuss with your real estate agent about their own procedures for finding the best deals out there. Inquiries about their work ethics and tactics might give you some idea about how compatible the deal will be. After that, you have to discuss your own thoughts and strategies suitable for your requirements with them making sure your agents understand it properly. Experienced and top agents will instantly know how to find an investment property that will tick all the boxes as per your requirements. They will come up with a solid plan to focus on the types of properties that will suit your goals.
If you are a newbie, ask your agents to assess your strategy and visions too. Excellent real estate agents can guide you throughout your plans and will warn you about your weaknesses.
3. How do you measure cash flow on a property?
This question can gauge the depth of field knowledge of your real estate agent. Someone who speaks the language of investment real estate will right away give you a satisfactory answer. Cash flow typically defines the amount of money that is transferred into and out of a business, especially as affecting liquidity. Cash flow is the most important parameter to screen and analyze a property. If your agents are experienced in this field, they will answer that they use cash-on-cash or net operating income. You can further assess their expected cash-on-cash returns by discussing them thoroughly. Every investor expects a potential source of revenue from their investment property if they don’t plan to occupy it themselves. So, maintaining cash flow through renting must be considered by an investor as well as the agent.
4. How many sales have you handled in the neighborhood I’m interested in?
As mentioned earlier, you have to narrow down your investment plans first as an investor. This plan must include all the areas you prefer for buying property. After a discussion with your real estate agents, you should ask them about their previous projects in the particular neighborhood of your choice. If they had done any deal in that neighborhood in the past, request them to share their experiences and insights with you. But the question remains: what if your chosen real estate agents do not specialize in that area? As your real estate agent, they will investigate thoroughly the original scenario of the particular neighborhood of your choice. If you still do not feel secure enough to invest property in that neighborhood, ask your agents which areas they specialize in and request their suggestions on where you should invest your hard-earned money. Any knowledgeable real estate agent will provide you with a listing of areas considered low-risk for investing.
5. Can you provide me with more details about the gains and losses of investing in this particular area?
The main purpose of hiring a real estate agent is to make the investment process easier for you. Your agents will do all the research for you, provide you with their best insights and guide you throughout your investment journey, therefore, making the journey a hassle-free one. After you have conveyed your goals and strategies to your agent, they will assess the area you are opting for investing in properties. Your agents can give you intricate details about the area along with the pros and cons of investing there from their experiences if they have already done business in that particular area. You can confidently move forward with their advice and grab the best deals available there. But if your agents do not have any previous experience in that particular neighborhood, it is their responsibility to investigate properly and give you reports on how beneficial investing in that area will be. Ask them all the questions you might have regarding your chosen neighborhood and leverage the information from the investigation report to make a knowledgeable decision.
6. What is the vacancy rate in this neighborhood and building?
The vacancy rate of a building or the neighborhood will be a very significant indication of a profitable deal. You need to ask your agents to investigate for an approximate value of the vacancy rate of the property. The higher vacancy rate indicates that there may be a declining supply of renters in the area. Whether the property is a multi-family or single-family unit, the statistics of how quickly renters are vacating that property is necessary to understand the market demands of a neighborhood. You have to ensure that the property you are interested in is profitable at its current or estimated vacancy rate. Or, you may develop a solid plan for lowering the vacancy rate while keeping in mind that this is taking on more risk. The blueprint of this plan must include the details of estimated costs of the building, including the property tax, cost of utilities, and estimations for maintenance. Let your real estate agents gather all the information you need and chalk out the development plan with minimal risk.
7. What is the current market scenario of mortgages and rents?
To assess the long-term prospects of the property, you need to be aware of the direction mortgage and rents are trending. Inquire your real estate agents to provide you with the necessary data so that you can make an informed decision. With the mortgage rates going up or down, you have to make your decision swiftly based on that information. The mortgage rate going up means the investment procedure needs to be as fast as possible to avoid any loss. As an investor, you also need to be knowledgeable about the increasing, stagnating, or dropping of rents in your chosen area. Rent rate will determine the amount of revenue you can expect from your investment property in the future.
8. Why is the owner selling this property?
An owner can put up his property for sale for numerous good reasons. Among the possible reasons, as an investor, you have to figure out whether the reason for selling is neutral or risky to you. Such as, owners can sell the property because they might be retiring or moving further away from the site of the property. Or, the owner could have passed away and the descendants who inherited the property might live far from there and are interested in selling it off. These are examples of neutral reasons which may not greatly affect your decision of buying the property. The reasons that might affect you include a problem with the property, decreased rentals in that area, and many more. It is not necessary that you should dismiss a property that faces challenges but you need to get heads up of the risks you are about to take by purchasing that property.
Other things to be on the outlook for are if the property is not being sold for a very long time, or the owner is selling the property too soon after his own and there are a string of recent owners. Both of the cases could indicate that there might be an issue with the property that needs to be resolved, but the owners are not willing to take responsibility. The problems can be very major such as entire roof replacement, broken electric system, etc. So, make sure your real estate agent finds out all the loopholes for you in this case and assesses the risks properly before purchasing the property.
9. Tell me about the risks involved in investing in this property.
After a thorough discussion with your agent about your thoughts on the property you are targeting, you must ask them about the risks involved if you haven’t already discovered any. Sometimes many flaws and risks go unnoticed as you are not a professional in this field. So, it is wise to trust the insights your agent will provide and take his advice.
You can choose Mir Real Estate for finding the top performer and best agents for the job, who can make sure you receive maximized profit from your investment by avoiding common mistakes. Agents from Mir Real Estate have an answer for every challenge you will face while investing and you can make informed decisions by choosing them.
Finding a good real estate agent is the primary condition when you are investing in property. Real estate agents will assist you throughout your property buying journey and will reduce the workload up to multi-folds. The key to getting back maximum profit from the investment property is to make a solid error-proof plan before purchasing. Your agent will help you to find the best deals and to make the best possible plan for your investment business. As an investor, it is your liability to assess the procedures to ensure that everything is going on the right track. For this purpose, many questions might arise as you are not a professional in this field. You must clear out all the confusion and inquire about everything you need to know about your investment business from your chosen agent. You need to ask about the experiences of your agent, the risks involved in investing in a particular property, the pros and cons of purchasing property in a particular area, previous owners and their demands, etc. You can only make the best deal if you are aware of the full picture here. So, inquiring your agent about these and receiving their wise insights is a crucial step in your investment journey.
How safe is investing in real estate in Dhaka?
Ans. Real estate investments are considered one of the safest options for investing and if the procedures are done cautiously, the risks can go down from minimal to even zero.
Where can I find the best agents available out there?
Ans. Without any hesitation, go for Mir Real Estate and get ready to be amazed. Mir Real Estate not only provides the top-performing and highly professional agents, but they also make sure your investment procedures are completely stress-free and relieving.
Is it a good decision to invest in real estate in Bangladesh?
Ans. Yes, it is wise to invest in real estate in Bangladesh as the real estate sector has been experiencing a boom time over the last few decades. However, all your processes have to be thorough and careful otherwise any investment will yield a minimum return.
Should I apply for a loan or invest my own savings?
Ans. The answer depends on any investor’s individual objective. If you expect an ongoing cash flow, you should go with your own money. On the other hand, going with financing might help you get higher returns.
How should I assess the risks of investing in a particular real estate?
Ans. Firstly, narrow down your objectives and requirements to a plan and discuss them with your agent. Your agent will assist you to find out all the loopholes in your scheme and then you can make an informed decision.