A dual-licensed broker and attorney walks through the questions he asks every new investor before they look at a single listing.
Jerry Larkowski, Managing Broker at ESQ. Realty Group, LLC in Little Rock, Arkansas, has one rule for first-time real estate investors before they ever tour a property: know what you are trying to accomplish, because the math changes depending on the answer.
Real estate is not a zero-risk investment, and that’s fine
Larkowski tells new investors upfront that there is no such thing as an investment with zero risk, but real estate remains one of the more risk-averse options available because of how many checkpoints exist along the way. Inspections, bank appraisals, and home warranties all exist specifically to catch problems before closing, which limits the downside compared to investments with fewer built-in safeguards.
“You cannot come up with an investment that is zero risk,” Larkowski says, “but it’s one of the better risk-averse type investments out there.”
Which kind of investor are you?
Larkowski sorts first-time investors into three categories, and he asks every client which one fits before moving forward. The first wants a specific cap rate and is focused primarily on that number. The second wants the property to cover its own costs with a cushion, typically a few hundred dollars a month above expenses, to build a reserve fund or provide some spending flexibility. The third simply wants to avoid losing money while the property appreciates and the loan balance shrinks, treating the investment as a long-term equity play.
None of the three approaches is wrong, but each one changes what kind of property makes sense, and what price makes sense to pay for it.
Do the math before you look at listings
Larkowski built his own spreadsheet calculator to walk new investors through the real numbers before they get attached to a property. It starts with purchase price and expected rent, then subtracts a property management fee, since many first-time and out-of-state investors will not be managing the property themselves. From there it backs out annual property taxes, insurance, HOA fees if applicable, and average utility or yard maintenance costs, then calculates the actual mortgage payment based on the loan amount and interest rate.
The calculator also factors in depreciation, since residential rental property can be depreciated over 27.5 years for tax purposes. That is a benefit investors do not see in their bank account each month, but one that shows up at tax time and should factor into the overall return.
Why a local lender, and a broker who is also an attorney, matters
Out-of-state investors can technically finance a property through a lender anywhere, as long as that lender is licensed to originate loans in Arkansas. Larkowski still recommends working with a lender who knows the local market, because a second opinion from someone familiar with area comps and rent expectations is worth more than convenience.
He also points to his own dual background as a broker and a trial attorney as a practical advantage, not just a marketing point. Reviewing purchase contracts, understanding financing structures, and catching language that could create problems later are all things his legal training informs on every transaction, first-time investors included. For additional market insights specific to Little Rock and Hot Springs, visit ESQ. Realty Group’s blog.
About ESQ. Realty Group, LLC: ESQ. Realty Group, LLC is a full-service real estate brokerage based in Central Arkansas, serving the Little Rock market. Led by Managing Broker Jerry Larkowski, a dual-licensed attorney with a background in trial law and litigation, the firm brings a distinctive legal perspective to every real estate transaction. ESQ. Realty Group advises residential and commercial clients, with particular expertise in investor services, contract review, and navigating the legal complexities of buying and selling property in Arkansas. Learn more at esqbrokers.com.
This article is based on information provided by the expert source cited above. It is intended for general informational purposes only and does not constitute legal, financial, or real estate advice. Readers should conduct their own research and consult qualified professionals before making any real estate or financial decisions.
