When to Pull In Experts
You can do a lot for yourself as a potential income-property owner, but there will be times when it is to your advantage to pull in experts. You may need help finding the right property, and a real estate agent has access to most of them. You also might be able to find someone in the loan department of a bank or an insurer who has information about what's coming onto the market. You may also find yourself needing advice or assistance from other professionals, such as lawyers and insurance agents. Don't fail to ask your contacts to let you know if they hear of anything that might be up for sale in the near future.
Real Estate Agent
Real estate agents have access to computerized listings in your area and some will be willing to spend time on less expensive properties even though they know up front that their commission will be lower. If you can find a couple of agents willing to work with you, ask them to be on the lookout for property that has potential as a rental unit.
One of the best things you can do for yourself when you're entering the landlording business is find an experienced landlord willing to give you advice and guidance and/or join the local rental property owners association, where you'll meet dozens of landlords owning large and small buildings. The person you choose as your mentor will be flattered to help you out. Best of all, it won't cost you anything except, perhaps, a few business lunches.
Real Estate Lawyer
Anytime you're negotiating a land contract and don't have a real estate agent working for you, you'd be wise to have your lawyer look at the contract before you sign it. He can spot wording or conditions that might cause problems down the line, and can help you get ownership that is unquestionably legal. Lawyers also can search for liens filed on the property; if there are any, the property is not free and clear. And a lawyer can find out whether the property owner has any pending court cases or previous bankruptcies or if he repossessed the dwelling on a previous land contract.
Title Company Representative
The best way to find out if the owner has a clear title to the property you've agreed to purchase is to have a title company search the records. If you're dealing with a mortgage company, you won't have a choice; they'll require it. But it's money well spent. You don't want to find out later that an heir or prior owner has a claim on the house you thought was yours.
Appraiser
To find out exactly what a property is worth, have it valued by an appraiser. Again, if you're going to have a conventional mortgage, that will be a requirement. Otherwise, you can hire one on your own. Look for more information about appraisers in Chapter 4.
In light of the 2008 mortgage crisis, it would be well worth your time to ask landlords who they'd go to for professional help, whether it's a bank or mortgage company, title company, broker, real estate professional, or appraiser. If one name or company keeps cropping up, that might be your best choice.
Insurance Agent
A good insurance agent will help you find affordable insurance policies, keep you abreast of premium increases, and answer your questions about riders and changes in insurance coverage. You need to find out such things as whether a separate policy for flood insurance is required, whether you need additional liability coverage in your area, and whether your policy includes full replacement costs. (See Chapters 7 and 8 for more insurance information.)
Building Inspector
Having a building inspector go over property that you are thinking of buying is a good idea if you don't feel you can truly assess structural damage and potential costly repairs. For an hourly rate, they will inspect the building with you, tell you what needs to be fixed, and follow it up with a written report.
