There are many things that skilled real estate professionals know that newcomers to the field still have to figure out for themselves. One of these vital yet understated skills is navigating online marketplaces.
With more people relying on the internet to arrange real estate transactions nowadays, investors need to be able to quickly and effectively navigate several online marketplaces. New investors may have even more trouble since many of these spaces have unfamiliar terms and designations for elements.
To help, 12 experts from Forbes Real Estate Council discuss the best ways for a real estate investment newbie to navigate this online space and get in touch with potential buyers and sellers.
Members of Forbes Real Estate Council share how real estate newcomers can effectively navigate online marketplaces.
Photos courtesy of the individual members.
1. Do Your Homework
While online marketplaces provide enhanced access to investments and high-level information, there is no substitute for thorough due diligence on the market and submarket, as well as the property itself. Further, it is essential to conduct in-person inspections and market tours. Important attributes may not be apparent until you set foot on the premises. – Jim Hegedus, Water Street Partners
2. Take Your Time
It’s easy to get caught up in the rush to invest in a popular deal, but not every deal is right for every investor. It has to make sense for you and your portfolio. Do your due diligence and make sure you don’t have any lingering questions about the business plan. – Ian Formigle, CrowdStreet
MORE FOR YOU
Forbes Real Estate Council is an invitation-only community for executives in the real estate industry. Do I qualify?
3. Partner With Local Experts
Partner with a local real estate investment expert. Many new real estate investors start by taking classes on basic financial principles and conducting online research. While this is a great starting point, it is essential to connect with an array of investment specialists such as a lender, accountant, lawyer and local real estate expert as each real estate market widely differs. – Marco Del Zotto, LIV | Sotheby’s International Realty – Breckenridge CO
4. Work With A Seasoned Investor
I highly recommend new investors work alongside a seasoned real estate investor. There are so many potholes and landmines that can easily be avoided by working with a real estate expert. From hard money lending to a chain of title investing, this is not for an amateur or the faint of heart. Thousands can be made or lost with one good or bad decision. – Lisa Copeland, The Agentcy by Tarek El Moussa by Exp Realty, LLC
5. Cast A Wide Net
Once you get serious about a particular transaction, do your research. Don’t invest in a company bereft of proven results. If possible, grill previous clients on their experience with the vendor. Don’t be afraid to ask rude questions and be picky—it is your money on the line. A reputable seller will value your concerns. – Michael McMullen, Prominence Homes and Communities
6. Get Educated On ROI Expectations
Learn everything you can about the market and sector you’re investing in, what it was like pre-Covid and how quickly it is expected to bounce back. I own a franchise in Mexico, a market many investors are unfamiliar with, but one that has historically offered a great ROI on rental income investments. Buyers need to be educated on short-term versus long-term ROI expectations. – Gregory Gunter, Berkshire Hathaway HomeServices Colonial Homes San Miguel
7. Survey Multiple Data Sources
Online marketplaces are useful tools, but must be supplemented with a sound investment thesis, independent analysis, and experienced guidance. Survey a wide variety of data sources, use your own analytical skills and intuition and track the strategies of successful investors until you have developed the personal chops to go it alone. Like nearly everything, slow and steady trumps risk and flash. – Megan Micco, Compass
8. Be Clear And Upfront
Always make sure to be clear and upfront. Your reputation and brand require you to be trustworthy so that people want to continue to work with you. Relationships are everything in this business. – Mike Hambright, FlipNerd.com
9. Look For Transparency
When navigating on online marketplaces, look for transparency. Make sure the manager provides a clear picture of their performance—offering regular and historical reporting, audits, financials and data/asset tapes. If a manager is reluctant or refuses to provide this kind of investor-friendly reporting, run away. Quickly. – Don Wenner, DLP Real Estate Capital
10. Always Run Your Own Calculations
While the numbers available on online marketplaces are a great starting point for investors, you should never base your investment decisions entirely on them. You should run your own calculations to ensure that the advertised numbers make sense. It’s also good to connect with local investors to see what return they are getting. Comps are your best estimate of investment property performance. – Taylor Valore, Mashvisor
11. Understand The Risk-Adjusted Return
Not everything that shines is gold. Always ensure you understand the risk-adjusted return for any investment. If the returns are very high, it is likely that the risk is as well because everyone would otherwise be bidding to invest in it and that would drive the price up, making the return lower. This does not mean you shouldn’t invest in it, but you need to factor in the expected value after risk. – Khushboo Jha, BuyProperly Limited
12. Visit The Property In Person
Make a short list and drive by the properties you like first before booking an appointment. With the pandemic in full swing, why waste your time, your realtors time and put people at risk? A simple drive-by can potentially eliminate up to 50% of the showing. You never know what the house next door looks like or what the certain driveway constrictions are until you see the home with your own eyes. – Chris Ryan, Beyond Properties Group (eXp Realty)