Hi there, new here and hoping for some advice...

I feel like Im in the middle of a rock and a hard place. I am very new to investing. I purchased a new constrcution home and leased it out. My agent is my best friend and has always been my agent. In the past Ive purchased properties for myself, and he always shares the commission.

Well recently I began looiking for a second property. He recommended a mortgage broker to me and they got me approved, stated income. Now its time to shop. He has shown me several properties. I made an offer on one but lost that battle. So Im still looking...

Another friend of mine, who happens to be My Agents' cousin, is a Lawyer. He wants to invest in property as well, and asked me if I wanted to do a joint investment deal. We can purchase multiple properties and better our chances for a return. He has his financing squared away as well.

My friend the Lawyer said we do not need an agent, as he can represent us both, and even do the title work, as thats one of his firms companies. The savings we'd get from not having an agent are HUGE opposed to what I would get from my friend the realtor.

I want more money obviously, but I am worried that I would upset my friend the realtor if I dont go through him. On the other hand, he is much more experienced, and with his help I could probably do better, but I would only be able to purchase one property.

I know its starting to sound confusing, but I just want some advice. Should I stick with my agent/best friend who will share some of the commission, or should I go with his cousin, the lawyer and get all the commission?

Most investors will probably think Im crazy because its all about money, but my friendship with these 2 really matters.

I feel like Im taking the loan that I got, from my agents recommendation, to another guy and buying a house and leaving him out.

Give your friend, the agent, the opportunity to defend his position. Be tactful. You may be able to get a win-win situation.

mikeman,
Just because this guy is an attorney does not make him knowledgeable in the market and other aspects of investment properties. You said this attorney is also a rookie investor but he thinks because he is an attorney and in most states can buy & sell real estate that also makes him competent. If your Realtor deals with investment property then it is money well spent!

This attorney is the cousin of the Realtor and is trying to cut them out of the picture? And people wonder why lawyers are compared to Sharks!

Stick with your friend. He is giving you commission that he does not have to give you, you trust him and he has always been there. I think he may take it personally if you leave him out. You can make money with the cousin but for how long?

"pigs get fat,hogs get slaughtered"Greed is a wonderful thing.

If the attorney hasn't had much experience with this he knows nothing.The agent will be able to find you the deals.

Try having an attorney negotiate a short sale that has never done one before,that should be fun to watch.Just like realtors there are competent ones and then there ar eone where you wonder how they ever recieved there liscense.

This sounds like a "partner" that I had at one time. As time went on and we were talking about things he shared with me that when his daughter got sick (long term) in Kentucky he took her out of the partnership.
Lesson learned--when someone is willing to cut out a relative where do you think you stand?
At least I got all my initial investment returned after he was able to leverage it.

You have a simple choice. Go with the guy who has helped you in the past and can in the future or go with the guy who wants to make a quick buck at your friend's expense. Are you going to trust him down the line not to screw you too?

Thanks for all the replies. I guess I was a little greedy as well. Its just so hard to turn down 12000 dollars and take 3 grand. I'll still stick with my friend the realtor, maybe just let the lawyer do the title work.

Thanks everyone.

Your friend and agent "shares the commission" with you? Is this legal in your state? I know that rebates are becoming more common but if I shared my commission with a buyer and my broker found out about it I would be in deep doodo.

I assumed he was cutting his commission to the seller and the buyer taking advantage of it with a lower price. If he actually received it and gave it to the buyer that is a NO NO.

Mikeman,
How about a clarification on this--if your friend is just giving you cash back after closing then your decision could be very easy as your Realtor friend might not have his license much longer.

Unless your state has some really odd statutes.. a brokerage can and often do share commissions with principals of the transaction... that is what negotiating commissions is about and required by federal law. Brokerages do not have to agree to share but can, but only with principals, the buyer or seller and not 3rd parties.

I think some of the newer agents get confused over this issue.

Realty Check,
I have reduced my commission many times to get the deal done and while this does allow the buyer/seller to walk away from the closing table with more money in pocket I have never closed a deal and then handed my client his "share" of my commission check--might be legal here but don't plan on finding out the hard way.

Mike, wait, hold on, stomp on the brakes right now!

If you're seriously doing "deals" where the buyer's agent makes $12k and you only make $3k, you need to throw those worthless deals away and find better ones.

If these are the deals your realtor friend is bringing you then either he's not really your friend and he's just lining his pockets while you take all the risk. Or he's simply incompetent when it comes to real estate investing.

Unless you're doing zero risk contract flips that take all of a couple of hours to complete. You should be making at the very least 2 to 3 times as much as both agents combined. For most real investments the agent's commission is a minor expense and well worth it if the agent is bringing you great deals and/or eager buyers.