In order to become successful as a Real Estate Investor, there are many important tasks that need to be completed, many different professionals that you will have to network with, many different laws that will need to be followed, and much time to be invested, etc. You cannot complete an investment project solely by yourself. It is vital that you assemble a team.
WHY DO YOU NEED A TEAM?
A real estate investment team is vital to your success because everyone on your team will or should be a professional in a specific area and will contribute to the common goal of making money in real estate investing. Each individual will bring their skills and expertise to the table to help things run smoothly. This will also make things move faster and anyone who knows anything about real estate investing knows that doing things quickly or in a timely manner will help you create more money and save more money.
WHO SHOULD BE ON YOUR TEAM?
When building your team, you will want to make sure that you know your skills and what you are willing to do to contribute to the team. Next, figure out what areas you will need help in. Then, find the right people that will be able to help where you lack.
It is important to make sure that whoever is on your team will add value to your team’s common goals including yourself. Below are some of the key roles needed in your team:
A lenders are vital to your team. They add value because there is no way that you can purchase properties, purchase supplies for rehabbing, purchase home insurance, pay for gas, electric, heating, and air while rehabbing a home without money. When you have a good hard money lender, private money lender, or bank that you can trust and they trust you, you will be able to do incredible things. You can find a perfect deal at an auction and with the right lender, all you will have to do is make a phone call just to get the okay to move forward with bidding on the house. With the right lender relationships solidified, you can put in offers for HUD homes and REO deals with little to no worry about how you are going to close.
REAL ESTATE AGENT:
With the right real estate agent, value is added to your team because the agent has access to things that you will not have access to unless you have a real estate license. A good real estate agent is always logged into the MLS and knows what’s going on in the industry. A real estate agent sees properties as they come, as they go, as they are withdrawn, expired, etc. Whenever you need to find comps on a specific property, a good agent will send you that information in no time at all. With the right agent on your team, you can put in offers on properties with ease. You can leave with your agent a copy of a check and a proof of funds letter, and, when you need to make a quick offer, just have the agent write up a contract, send it to you, sign it, send it back, and he has everything else to negotiate and get the offer submitted. It is also good for your business to have a licensed agent list and market your property. Some investors will list property themselves, either with a listing service or they might even have their own real estate license. However your time is best spent finding deals. The time involved with selling your own property, managing showings, coordinating closings, takes you away from this activity.
A contractor adds value to your team because without a contractor, you are stuck managing the rehab yourself. This is the most time consuming part of the business. Some investors will buy a project and rehab the house, either doing the work or managing the project themselves. They think they are saving money, maximizing their profits. However, the highest and best use of your time is finding deals (sound familiar??) If you are spending even a few hours a day managing or working on your rehab, it only will it take longer to get it to market, but you will miss out I finding as many deals as possible, limiting your income.
TITLE COMPANIES/TITLE REP OR ESCROW OFFICER:
A title company is always needed to close a deal when you are purchasing a house and also needed when you are re-selling the house. Some title companies do things that other title companies will not do, so finding the right title company is vital to your team. You will want a title company that has no problem doing double closings and assignment deals. It is perfectly legal to perform these kinds of tasks in many states, however, not every title company will do so. You will want a title company that will start working on your transaction as soon as possible and will be able to close as quickly as possible for those times when closing is time sensitive. You also want to make sure that the title company you choose records title with the municipality as quickly as possible. Some companies wait months to record title after closing. This can cause issues for both the seller and the buyer.
You will want to have a personal contact at the title company that knows what you are doing and will handle your deals with care, keep you in the loop, provide great customer service, and will get the job done for you.
If you are planning to rent out some of your properties, a good property manager will add value to your team. A good property manager will be able to keep the properties occupied with as minimal vacancies as possible. They will be the ones to handle those late night phone calls that you do not want to answer when a tenant has a leaky faucet or a clogged toilet. They will take care of your tenants with professionalism. A good property manager will keep your rental cash flowing into your pockets while you are working on your next property renovation.
When rehabbing properties, you will need builder’s risk insurance. A good insurance agent who has experience working with investors will be able to get you the best rates on a builder’s risk policy and properly explain the fine print.
REAL ESTATE ATTORNEY:
A real estate attorney will add value to your team by making sure that all of your contracts are written correctly to avoid financial damages. They will know how to add exit strategies to your contracts just in case you need to back out of a deal for any reason. A good real estate attorney will keep you informed of the things that you as an investor can and cannot do. They will update you with the changing of laws, rules, and restrictions. They will represent you in court just in case you run into any issues. The more success that you gain, the more you will need an attorney that knows how to represent a real estate investor.
If you are using bank loans, or need to refinance out of hard money, you will want a good Mortgage Broker who will be knowledgeable in real estate investing and will be able to get you the best rates on your loans. They will need to be creative when helping you with your mortgage needs.
When tax season arrives, you will want an accountant who is also knowledgeable in the laws of real estate taxation. The right accountant will be able to help you structure your business correctly and take all the deductions legally available to you. You will want someone who is experienced in working with other investors. Ask other investors for referrals.
WHOLESALERS AND BIRD DOGS:
All of the other members of your team will be of no use if you do not have any properties to rehab. One of the best ways to find real estate deals is by using a wholesaler. By being a trusted investor to a wholesaler, they will keep you on their buyers list as one of their VIP buyers. Make sure you tell your wholesalers what your criteria is so that you can be one of the first investors that they call whenever they have a great deal. Sometimes you may want to skip the middle man and have bird dogs tell you about properties that they have found.
INSPECTORS AND APPRAISERS:
When you are ready to make an offer on a deal, you might want to have an inspector to inspect the property to figure out how much work is really needed to fix the property. You might also want an appraiser to appraise the house and let you know what the actual value of the property is before you buy . You will want an inspector and an appraiser on your team that knows what they are doing and will be able to come out to the property immediately when you need them.
A partner can add value to your team because they can be the person that can run things for you when you are not available. If you are the type of person that works a full time job and can only work on your investment business part time, you will need a partner to pick up the slack when you are not able to. Or, if you are the type of person who is just starting to invest and you do not feel confident in jumping in without any help, you may want to find a partner that has the knowledge and/or expertise. If you are the type that has grown your business to the point where you have too many rehab projects at one time, you may need a partner to run some of the projects while you run the others. By having a partner, much more can be accomplished in a smaller amount of time. You can go attend a particular auction and your partner can attend a different one that happens to be at the same time on the same day. You can go to a closing and your partner to go to another that happens to be on the same day. Partnerships add much value to your team.
No matter who your partner is, you will want them to add value to the partnership, and you should be aware of the value that you add as well.
In part two next week of our “Building your real estate team” featured post, we will discuss the many ways you can go about finding the best candidates for your team.
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