My main job is as a Realtor and I specialize in listing REO and HUD properties. Many people may think this would give me an inside track to many investment opportunities, however that is not the case.
I am able to make over 24% cash on cash return on my rental properties, but I never buy my own listings. I detail how I get these returns on my complete guide to investing in long term rentals.
As an REO broker, I list properties for over 35 banks, asset management companies, and hedge funds. It is considered a conflict of interest for me or my immediate family to purchase any of the homes I list for those clients. I could greatly influence the list price and marketing of a property in my favor if i was allowed to buy my own listings. Going one step beyond that, I am not allowed to purchase any properties that some companies list, no matter who the listing agent is.
I work with HUD and because of that I am not allowed to buy any HUD homes period. On top of that, no one in my office or immediate family is allowed to purchase a HUD home either. If you are a Realtor and an investor, pay close attention to what office you join. If you join an office with a Local Listing Broker for HUD, you will no longer be able to purchase HUD homes as investments or a principle residence.
Bank of America does not allow me to purchase any REO or short sale approved by Bank of America because I list homes for them as well. Bank of America has had a lot of great deals in the last year and just about 1/4 of all short sales I see are Bank of America.
Fannie Mae just implemented a policy that no Real Estate agent or their family can buy a Fannie Mae property listed in that agent’s office. An agent could buy a Fannie Mae property listed by another offer if they disclose their office also sells Fannie Mae.
If you have visions of becoming a high volume REO broker and you are also a serious investor, be aware of these issues. My inventory of properties I can choose from is greatly reduced, but don’t get me wrong–I love my job and the income it provides.