[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
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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
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[Music]