The world of real estate investing can be daunting as there are so many key pieces of information needed to be successful. The information you need will either be held by yourself or key members of your investment team. Before you can begin assembling your team, you must first self-assess.
Self-assessment is an awareness of your personal knowledge base: understanding your own strengths and weaknesses is critical to your real estate success. Are you skillful at sales, engaging people? Are you skilled with your hands? Are you good at crunching numbers quickly? Are you a lawyer? An accountant? Do you have the personal resources needed (time, starting capital, willingness to learn?) Once you understand where your strengths lie, and where your personal opportunities for improvement are, you can begin to fill the gaps in your investment knowledge with increased education and/or bringing on team members who excel in the areas you are weak.
KEY ROLES TO CONSIDER IN DEVELOPING YOUR INVESTMENT ‘TEAM’
MENTOR: A mentor can be instrumental in guiding you through the process of successful real estate investments. You may find your mentor through the network of people you already know or through your educational endeavors. You may even be able to ask to join/shadow someone else who is already an expert in the field (someone who is already where you aspire to be). You can ask to be taught so you can learn the flow of things in exchange for offering your skill sets.
DEAL FINDERS: Deal Finders are people that will help you find wise investments. This could be something you are already good at, or you may choose to find other deal finders. Deal finders include Bird Dogs (someone who will find a good investment and pass on the property address and owner information to another investor for a fee) or a Wholesaler (someone who contracts the home with a buyer at a higher price than with the seller and keeps the difference as profit). But most commonly your deal finder will be Real Estate Agents. Real estate agents are a great part of your team. A suggestion here is make sure that they work with investors, not just homeowners. Homeowners and investors are completely different customers.
LENDERS, BANKERS: Develop this relationship BEFORE you need the money. You want to have the relationships and terms established up front before you make any offers. That way, when you begin to run your numbers, you will know if a deal is a good one or one you should pass on based on the terms you can get.
Some investors will rely on a hard money lender (an asset-based loan where a borrower receives funds secured through real property). While other investors will not go near them. Regardless, you want to have options when you are in the mix of financing your deals. With some deals, having a hard money lender makes sense; with other deals, it does not make sense. Again, it is helpful to find a hard money lender that you are comfortable with, who you trust, again, BEFORE you find your deal. It is also possible to line up a Private Money Lender or even Equity Partner early on.
The reason it is tough for newer investors to get private money is because most private money lenders/equity partners want to partner with someone that has investing experience under their belt. However, this team member might be possible for you if you have skill sets, capabilities, or knowledge to barter in exchange for the private money. This is another example of the value in knowing your own strengths.
TITLE COMPANY: You should typically work with the same title company for all your real estate investments. This builds a long-term relationship with the title companies, and they are more willing to go above and beyond when they know they are going to get repeat business.
CPA: CPA’s also known as Certified Public Accountants, provide financial strategies, prepare reports for property owners and real estate investors, and contribute with planning, investment, budget and tax reporting activities. This is a very critical person to your team. Again, as with real estate agents, you want to ensure your CPA has real estate investing experience. Ideally, your CPA would be a real estate investor themselves. The time to add this person to your team is right now, when you’re starting off. You must comply with all the tax rules from the very start. It would be a hard lesson to learn when the IRS comes knocking.
ATTORNEY: For any new real estate investor this team member is well worth the time, effort, and cost. People often refer to the fine print and legal documents are not easy to understand. So, having someone on your team who can go through all your contracts and legal documents and who knows the legalities of what you are trying to do would be instrumental in helping you succeed faster. Ideally, you would want to find an attorney who has real estate knowledge and could help put together partnerships. A bonus would be having an attorney who owns investment property as well. Again, they are well worth the money, you do not want to find thing out the hard way.
CONTRACTORS: If you are looking to renovate and rehab properties, it will be very important to find reliable and trustworthy contractors (unless of course, you are a general contractor yourself). Whether you find a licensed contractor or a handyman, you’re going to need someone who can fix up the properties in a timely manner with good craftmanship, making sure the property is up to code, and is cost effective in their prices. Finding these people will help you buy and get the property or properties ready to rent or sell. Every experienced investor knows how hard it is to find an experienced, reasonably priced, skilled contractor who can finish the job on time. Contractors come and contractors go. When you find a good one, remember to take good care of them. Be clear with the scope of work expectations with both money and project timeline. Pay them promptly, you may also want to give them additional bonus or financial incentive if the project gets done under time and under budget.
CLEANING COMPANY: You might not need this company for a while, but after a rehab, when you’re ready to list your rental, or if our rental property is between tenets, you will need this company then! A good cleaning goes a long way to a fast turnover. Again, it will be great for you to find a company that you can give repeat business to as you grow your portfolio.
PROPERTY MANAGER: You might want to manage your property/rental yourself. Either way, it is always helpful to begin interviewing property management companies in the area you want to invest in (especially as your property portfolio grows). First, you want to know what they charge, what they offer. Almost all property managers do this job for only 6-10%. Property managers don’t just collect rent and send you statements; these guys are highly knowledgeable businesspeople who literally make a living working with real estate investors. Even their perspective on the local market is invaluable. They can also help you learn about your potential competition as well.
NETWORKING OPPORTUNITIES: Look for investment related conferences and other investment themed educational offerings in your area. Not only can you increase your personal knowledge base, but you can also meet people with the same interests who can either direct your personal development or can potentially fill a key role you need filled. Conferences and meet ups can also keep you abreast of changes in the legal landscape and investing opportunities, so look for a variety of networking opportunities and take full advantage of these opportunities. Let this sink in for a minute. A lot of us are missing this. We all see the value in going to meet-ups, attending real estate club meetings, finding mentors. Why? Because we know we can network with other investors. You know where that next deal will come from. So, Start Today!!!!! Find local groups and begin networking to build your team!
Intro to Real Estate
When beginning an endeavor, it is important to first evaluate your own strengths and opportunities for improvement. Then, you can add knowledge and team members to fill in for gaps or skills you may be missing. This is where Intro To Real Estate can help.
Intro To Real Estate is for people like you, people who want to pursue financial freedom through real estate investing to ensure a powerful financial future for yourself and your family. Knowledge is power. With each and every step you take with your education, it is important to look for some guidance and mentoring. At Intro to Real Estate, we offer our in-person and online real estate education courses to help you in your investing journey regardless of your prior experience or learning style. We use real-life investing scenarios to effectively equip our students with the tools they need to succeed.
If you are ready to invest in your future, start by investing in your education. Contact us today.
Wishing you great success in all you do!