[Music] Hello everyone and Welcome to another episode of Selling Greenville your favorite real estate podcast here in Greenville South Carolina I'm your host as always Stan McCune realtor right here in the Greenville area and you can find all of my contact information in the show notes if you need to reach out to me for any of your real estate needs and just a reminder as always please if you like this show subscribe to it make sure you don't miss future episodes please also leave a five-star rating if you will a few of you have left less than five star ratings you know what I'm kind of okay with that although I would much prefer a festar rating but I would prefer a rating over no rating so please leave a rating if you can and if you can just take a moment just leave a short little review that will help get the show out to as many people as possible today we're going to be having a little bit of fun but I think that this will offer some value as well I want to discuss trick questions for interviewing investor Realtors I might modify that title when I actually come up with the title for for this episode but trick questions for interviewing investor-friendly Realtors and the reason why I want to discuss this is because as a lot a lot of people know I have kind of built my business over the years not exclusively but in a lot of ways in the investment side of residential real estate I don't do much in the commercial space it's always in the residential end of things but that was how I kind of broke in I broke in as an investor friendly quote unquote I I know that that means different things to different people but an investor friendly realtor and from there I built my business and I don't just help investor clients I also help just standard retail clients looking to to move but a core part of my business has always been the investor side of things and that also helps with my non-investor clients as well because I can think in terms of value I can think in terms of where the market is going and and I have resources where whether it be contractors or specialty lenders or whatever the case may be that can help my clients in a transaction even if it's not a an investment type of of purchase or sale but when I am in the marketplace and I'm communicating with other Realtors or just monitoring my email I'm with cedan Joiner Realtors and we have you know a company email where people can send out questions and of course I have no problem with newer realtor that go on there and will will blast out obvious questions that happens all the time it's going to happen in any firm but it's remarkable to me how many times I'll see questions that it's just like wow they don't know anything about investment real estate and it's not even questions about m investment types of properties is just sometimes very basic things and ironically enough as I was getting ready to basically set up to record this episode was looking at things that had come on the market or that had gone under contract the last few days and I noticed this wasn't from my office this was this was a different realtor from a different real estate brokerage that had listed a duplex for sale and they had listed it as a single family residence they hadn't even listed it as a multif family property there is a separate section in Greenville MLS for duplexes triplexes and quadruplexes but instead they chose to list this duplex as a single family resident and guess what they listed it for below market value and of course it went under contract right away someone who was you know was was really interested in a duplex this was in the in the Simpsonville area somebody that was really interested in in in a duplex in the Simpsonville area got relatively speaking a good deal it wouldn't have been the kind of deal that I would have gone for or that any of my current clients would have gone for but it was a strong deal for something coming on MLS probably the the best multif family type of of opportunity I've seen on mls in probably the past 6 months and it probably would have sold for more than what it sold for I mean I don't know yet they're still under contract so I don't know what the final number is going to end up being but most likely it's less than what it should have been because it was listed incorrectly the realtor did not even know to list it as a d that's absolutely astonishing to me but this is the type of stuff that happens and the reason why I'm going about this with with the this podcast with asking trick questions first off let me just say this I frequently am interviewed to be to represent people as their realtor when they're interviewing other people and I enjoy that I always encourage people to interview multiple Realtors and I'm always confident that I will that I will give a good impression in those moments but when you're interviewing someone to represent you as an investor it's not as easy as you might think to to craft the appropriate questions and often times the best way to go about it is to ask a question where you're not really asking what they think you're asking because what I've learned over the years is that the realtors that are are actually experienced and Savvy in investment real estate actually let me back up for a second I know a lot of realtors that claim to understand investment real estate and then when I get involved with them in a transaction it's like okay they they don't they don't know what they're doing and it's frustrating because I want them to know what they're doing I I don't I there is value that a good buyer's agent or a good listing agent can provide and I always want to be across the table from another realtor that is good at what they do that just makes everything go more smoothly in a negotiation in a transaction Etc and so where I'm going with this is that it can be tricky sometimes to separate the wheat from the chaff when it comes to Realtors claiming that they have a Proficiency in investment real estate they can probably rattle off oh yeah I've helped these people by these Investment Properties or you know I have a rental property for myself or whatever the case may be but there is a certain level of savviness a certain level of experience that you can't just see superficially when you're just looking at Raw numbers there's a reason why I get questions all the time from other Realtors about different things related to investment real estate and I try to help them as much as possible because I prefer I prefer everyone to be better at this the more Realtors are better at this like I said the the more it'll help everyone but I feel like sometimes the the best way to go about this if you're in a situation where you're looking to interview Realtors to potentially help you on the investment side of things or if you just want to I think that this has value to just kind of shaping the way you think about investment real estate as a whole and just how to just approach the entire transaction I think that that thinking about it through this lens that I'm I'm about to attempt to do with this episode I think will be helpful so here are some trick questions that I came up with I came up with I think eight trick questions for interviewing investor friendly Realtors the first question is what CPA would you recommend to facilitate a 10 31 exchange what CPA would you recommend all right the reason why I feel like this is a good good question and a good trick question is because really if if you asked this question really the first thing that you should be starting with is actually okay do you understand a 1031 exchange requires more than just a c CPA that requires a 1031 intermediary are you already under contract like if you're already under contract to sell a property or to buy a property and you're hoping to do a 1031 out of that it might we might already be too late in the process there's a lot of things that need to be considered so somebody if I had a client that came to me and was like hey do you have a good CPA to help facilitate a 1031 exchange my first response wouldn't be yeah I I think I can find you a good CPA no my first respon would be okay hold on for a second let's figure out exactly what you need um and let's start with what are you attempting to do here and what is your time frame because there's a lot more than just having a CPA involved that facilitates a 1031 exchange um what kind of here's question number two what kind of cap rate should I expect if I invest in single family homes or duplexes cap rate is a way of kind of assessing investment properties but is really primarily used in in commercial or like larger multifam types of context but sometimes I will get this question what kind of cap rate should I expect or what kind of a cap rate is there going to be for the this type of property or or these types of properties and again my specialty I don't handle large multif family or commercial properties typically typically I'm handling single family homes duplexes triplexes quadruplexes and what at the end of the day this is a good question to ask a realtor anyway what kind of cap rate should I expect because first off a lot of residential Realtors won't even know what cap rates are because that's not something that is talked about in our world very much but it is useful to understand and I think it is good to assess okay how much experience how much knowledge does someone have about this world this world of investment real estate from that standpoint do they even know the lingo and of those that do know I I would say I would argue that many of them if they get this question and again for single family homes duplexes properties like that they should be steering away their clients from thinking about small rental portfolios from a cap rate standpoint and look at other rules like we've talked about in the past we've talked about the 1% rule where basically you're looking for properties for rental properties that bring in per month 1% of your your buyin price your purchase price potentially your purchase price plus whatever improvements you made that is kind of a better way to compare these smaller portfolios whereas the cap rate way of looking at it to me is a better way of looking at comparing commercial properties and larger multif family like apartment complexes and whatnot against each other because when you're when you're purchasing when you have a much larger type of property or a larger commercial property it's just it it's a very different numbers than when you're dealing with these smaller house portfolios and often times the cap rates for if you're comparing the cap rates on a commercial property to and you look at cap rates for a quadruplex I mean the quadruplex is going to look incredibly appealing as compared to a you know strip mall for instance but someone that's buying a strip mall is trying to do something different than someone that's buying a quadruplex at the end of the day and so I think that that is a very important detail so if someone came to me and they asked me for a duplex what is the cap rate for this duplex the first thing I'm going to do is say okay we I can tell you what the cap rate is but I would also tell you cap rate is not the way I would assess this property here's the way I would assess it and here's why and so I think that that's a a good trick question to kind of see how do do they know the lingo and then do they understand that there are other ways for assessing these types of properties that might be more accurate now I still have clients that are just like you know what they they they don't care they still want to see the cap rate and it's like okay I can do that it's pretty simple for me to calculate a cap rate on a property but um or or an estimated cap rate for a property but um I I like to at least make sure that they know that that might not be the best way to assess it um trick question number three and and I like this one because I see this type of I I see in a variety of ways that Realtors don't understand a key part of this one um which I'll explain here in a second all right trick question number three how would you help me if I were moving to this area and needed a place to rent for 6 months and then planed to buy a house after that um and and there's more to this question but I'm going to pause for a second and interject this happens to us a lot as Realtors we have a lot of times that that clients will come to us and they're looking to move here from from out of state or whatever the case may be and they need place to rent for a while before they end up going and buying okay and so they will come to us with this request um Can Can you help me find a rental and so I see a lot of times Realtors sending out emails asking for hey does anyone have a rental property coming up that fits these various criteria all right so with that in mind how would you help me if I were moving to this area needed a place to rent for 6 months and then plan to buy a house after that the minimum requirements for a place to rent are I need 2,000 ft I need four bedrooms at least two bathrooms and I need it to allow a small dog all right now Realtors who haven't dealt with rentals very much or or sorry I should I let me start with Realtors who have dealt with rentals quite a bit will immediately notice the elephant in the room and and maybe you noticed as you were listening what was the elephant in the room the request the minimum requirements for the place to rent left off one of the most important details the price what they can actually afford to rent what they're hoping to afford to rent um it also isn't clear if they need a furnished rental or if they need an unfurnished rental um it's not clear there there's details that I'm also thinking about okay does the does the dog shed is it hypoallergenic um different things like this and so I see emails all the time being sent out with this type of criteria I have a client moving to this area and they need to rent oh and also a very obvious thing as well this is often times less important but but the very obvious elephant in the room as well is that there's no generic location even is this Greenville County is it Spartanburg County could they live out in Pickens um and so I see this all the time realtor sending out emails or putting on Facebook groups um hey I've got a client that's moving to this area and they need 2,000 sare ft four bedrooms two bathrooms and a place for a small dog do you know of anything do I know of anything where how much does they've got a small dog does it need a fenc in yard it's remarkable to me how many how frequently Realtors will in will have these types of of things where they're trying to help out their clients and they've not even addressed the most basic elements of the ask um and I think for a lot of them is because they're not thinking they're not used to thinking about rentals they're they're just they're in the mode we're in in MLS we have certain criteria and you're not one of those criteria typically isn't the monthly payment and that's the one that surprised me the most is how often people will will send out a blast like this that they're looking for a rental property they're looking for a place for a client to rent for for a little bit of time and they won't say how much per month I mean that is such a a fundamental part of all of this um but when we're searching for our clients for something to buy we're not looking at the monthly numbers that's a whole separate thing um that sometimes we'll talk about um of often times it will come up in conversation but it's not something we can't sort Properties by that um not not on the the resale market for rentals obviously we can but because Realtors aren't used to thinking about rentals often times they will completely miss it so I think that that's kind of an interesting way of getting into a realtor's mind of of whether they can think of it can can whether they are actually in that world and are are thinking about rentals or whether they are only thinking about purchases and in sales um question number four what are some of the best areas to buy a duplex in what are some of the best areas to buy a duplex in the reason why this is a atric question is because there's like no duplexes available right I I mean I just mentioned this is this is why it was so egregious that this one that I mentioned before was listed as single family because there are almost none available particularly in Greenville County so if I have someone that comes to me and says where you know what's the best place to buy a duplex or a Triplex or a quadruplex it's like really there aren't any available so what areas are you targeting give me the the broadest possible Geographic radius that you can or or tell me kind kind of what type of area you're looking for or what kind of criteria loose criteria you're looking for and then maybe we can start to reverse engineer whether there might be duplexes that come available in that area that is really the bigger challenge um and so if you ask that to to someone and they say oh well I mean I would say a duplex in in Riverside School District well sure yeah that would be great Riverside School District awesome I'd everyone would love to have a duplex in Riverside School District tell me when's the last time one of those sold you know when was the last time you even saw a duplex in Riverside School District I don't even know if those exist um and so that's kind of a way to see okay does this person actually know what's actually in the market because again most Realtors are not monitoring that multif Family Market and so they might not even be aware at just how low the inventory is for those of properties um question number five if I buy a property with a tenant in it that is paying below Market rent what can I do to make them pay more oo what can I do to make them pay more I actually do get this question sometimes and there's a very simple question that needs to be responded to every single time this a lot of these there's like a few different ways that you could answer this this one has a very simple response that always needs to be the next question and that is what does the lease agreement say what do the lease agreement say because that is the starting point if there is a current lease agreement in place that is where you start because that is a legally binding contract and the landlord landl and the tenants they have to abide by whatever that says and if the person if the realtor you're talking to doesn't immediately go to that then they obviously don't have experience dealing with tenants dealing with lease agreements and the like um and so that is a a a quick way to kind of assess how well they understand kind of the landscape when it comes to the rental market and the investment property Market question number six where can I air airb be and where can't I okay another question that in various forms I will get from time to time and here's the thing um there is no correct answer to this question and this one it's it's it's not a trick question but also kind of is right because there aren't clearly defined rules yet at least on where you can or can't Airbnb even within areas like like downtown Greenville where there are restrictive rules they still allow it with certain Provisions now those Provisions are extremely strict but to just say you can't Airbnb in Downtown Greenville that's not accurate that is not an accurate statement um it's just that functionally legally you can functionally it's extremely difficult um and I'm not going to get into that um in this episode that's something you probably need to talk to an attorney about anyway um or can just go on Greenville County's website where they outlined some of that on there and you can take a look at it for yourself um but in general I believe that it's best to avoid City Limits and HOAs but some cities and some HOAs do still permit Airbnb uses and so here's where again this is one where the response from the agent if you're interviewing an agent about this this is not that has a clear immediate this is how they should respond like the last question I asked um or or sorry yeah like the last question I asked about the lease agreements um but it's do they understand the context of all of this because there's a lot of context that is important when it comes to Airbnb types of properties and I'll mention that we we I've talked about in the past that there might be some changes coming to the short term rental regulations in South Carolina I'm hoping for that um but until that happens City Limits can can expand they can change and I think Greenville city is going to keep expanding their city limits um as well they can get more restrictive or less restrictive HOAs can get more restrictive probably not less restrict actually probably neither of them are going to get less restrictive things only get it seems more restrictive over time um so there there is answering a question like this there's not a an actual correct answer it's more on a spectrum it's more on a Continuum is the way I see it question number seven trick question number seven how much does a property manager cost now those with a little experience most people I think most Realtors will know that kind of the standard is around 10% of the gross rents and I would think a lot of them would just say oh yeah property manager is going to cost you 10% of the gross rents now if they don't even know that then that's that's a concern okay but most will just say it'll cost you 10% but those with a lot of experience will start by asking other questions okay first off are you talking about a property manager for a long-term rental like a six or a 12- month lease are you talking about a property manager for a short short-term rental such as an Airbnb type of property that there's differences there's big differences between the two of those and then there will be Nuance from from there depending on what type of rental that you're that you're trying to get but even so even for long-term rentals where 10% is kind of the standard that we think about there's a lot of other options too I know of property managers that do 8% I know property managers that do flat fee or that that offer multiple tiers of flat fees so there is a variety when it comes to that as well so if you have someone that just says oh yeah it's going to be 10% not necessarily there's that that would indicate that they have not talked to very many property managers that they've not dealt with very many rental property situations question number eight this will be the last question of the last trick question of the day and this one's this one's a real tricky one all right I I actually I I did these just an order of how they there was no particular order to this outside of this was the order that these came to me in and I was just kind of sitting there just I I didn't really know exactly what I was going to come up with as I was like brainstorming for this episode and this one came to me last and I was like ooh I like this one I'm glad to glad to end the episode with this one one if I wanted to buy a condo or a town home for use as a rental can I get or could I get traditional 30-year financing like a conventional loan or an FHA loan this is a great question here's why because in Greenville MLS condos and town homes are grouped together but when it comes to investment properties these are two very different types of prop properties Town Homes include the the basically the the real estate that they're a part of like maybe like a very slight sliver of a backyard condos they do not but here's the thing and and there are some other differentiating factors between the two of them but from the standpoint of getting financing on these getting financing on a condo is much much more difficult than getting financing on a town home and if you guys have been listening to this podcast for a few years now you know that I sold a bunch of condos primarily in 2021 I sold a few of them still in 2022 as well m but I sold I've sold a lot of condos over the past couple of years and they and basically there is this term that is used in the mortgage underwriting world called whe I don't know exactly how to say this but whether or not a condo is what they call warrantable if it is unwarrantable and there's a lot of rule I'm not going to get into the Weeds on all of this but there's a lot of things that can cause a condo to be unwarrantable by Fanny May and Freddy Mack rules which that's what we're that's the that's the rub here is it it's Fanny May and Freddy Mack there are a lot of things several things that could make condos unwarrantable that do are not as big of an issue when it comes to town homes now you can run into some of these issues with Town Homes as well but generally speaking it is not going to be the same problem from what I have run into town homes are are easy peasy I I've never had a single one fall through due to them being unwarrantable by Fanny mayate or Freddy Mack rules condos it happens all the time and so often times when you're when people are buying condos oftentimes they're not warrantable or there are issues with the HOA not having enough funds in reserve or things like this and not every lender will be able to overcome those issues a lot of times condos require if they're going to if it's going to be an investment property often times they require an investment property type of loan product and so that is a very very important detail on this that you oftentimes cannot just get a conventional loan or an FHA loan on a condo because of of this issue and particularly if you're buying as an investment property you're going to run into this issue even more because the the underwriting standards and what loan products are available to you are even more restrictive than when you're buying a home to owner occupy so good trick question there because a lot of Realtors will think of condos and town homes as the same thing but when push comes to shove when you're trying to get financing on them it it usually is two very different experiences so I hope that you learn something from this maybe you'll get an opportunity to to interview some realtors in the future and you can use some of these Maybe not maybe you just enjoyed it learned a little bit of of some of my thinking some of what I see from other real estate professionals some of the good some of the bad but I enjoyed this episode and I hope you guys did as well I'm hoping to have something very exciting for you guys next week not going to not going to tell you yet just in case for some reason it doesn't work out but I've got some things planned for next week for the show that I'm excited about so I hope you guys will stick with it hit that subscribe button if you enjoy this and if you're looking forward to getting more content and as well please leave a five star rating and a short little review my contact information is in the show notes we'll talk again next week [Music]