I am sure that many of you have been involved in building a dream hockey, football, soccer, or baseball team. You pick a dream team from players who are playing the game. Can you do the same for Real Estate investing? Of course you can. But who would you put on your dream INVESTING team??? Here is a look at what positions you might need to fill on your Real Estate Investing team.
One of the real estate investing courses I took described investing as a TEAM sport. I couldn’t agree more. There is no way that you can know everything, about every aspect, of every kind of investing opportunity. You also don’t need to. You DO need to know where to find the people who know what you don’t. That is your Power Team.
Those are the people who will train you as you go along. Will they get paid for the training? Yes they will. But you will be learning more all the time, so should need them less. I would recommend that you be good at at least one the things you need to know. Things like construction, negotiating, research, just to mention a few. Most importantly, knowing who to call for information you don’t know. That’s what people like Donald Trumph (Before he became Presedent) are good at. Details are handled by your POWER TEAM. Lets look at who might be on that team.
The first member is the Real Estate Agent. Without a GOOD AGENT you will have a hard time. Your agent needs to understands that you’re an INVESTOR. You are buying property to make money. Not because it is a “Nice House”. The agent has to understand that the only time you (the Buyer) have control of the price, is when you buy. The agent has to know the proper process to handle “Power of Sales” and “Wholesaling“. They need to be willing, and know how, to negotiate low ball offers. A good agent will understand the value of having an Investor as a client. (Possibly multiple sales per year) Agents have their finger on the industry like few others. They can tip you off to potential deals as soon as they hit the market.
The next member is your Mortgage Broker. A good Mortgage Broker has contacts with all kinds of money lenders, both Conventional and Unconventional. They are a fantastic resource when you need to know how money works in a Real Estate setting. I have found that a good Broker can set up the presentation of the deal so that you get more, and better, lenders looking at it. I have lost deals where the presentation was wrong. If one Broker circulates the property in a bad format, another broker will have a very hard time circulating the same property successfully. Do they cost you money? In most cases, they should not, they are normally paid by the lender. There may be some cases where you will be asked to pay a percentage of the mortgage value. But if they save you more than they cost, it’s a bargain. An experienced Broker can also give you ideas on creative financing.
You definitely need to have an experienced Real Estate Lawyer. A good general counsel can be helpful as well, when things go wrong. If they are not as experienced, they at least need to be willing to learn. When you run into problems with tenants, or contracts, it is a great asset to have someone you trust to call on for help. Once again they cost you money. I’d much rather pay for an hour of their time, then lose tens of thousands of dollars because I was too cheap to ask for help. If they are a member of your team, and they get all of your business, a phone call usually doesn’t cost you anything.
If you are not into construction or the technical side of building maintenance, you need to have a good Home Inspector as part of your team. Saving $20,000.00 on the price is no deal, if you have to spend $25,000.00 to fix a major unexpected defect. If you are into flipping houses, you really need to know what work really needs to be done. The cost of renovations comes out of your profit. This is especially true if you’re going to have the work done by contractors. Problems found by the inspection can also become a key negotiation point when it comes to the price of the house. Inspectors also cost money, but again if they are part of your team, you will have negotiated a fair price. They often save you far more than they cost.
Another member of your team is your Accountant. The bookkeeping end of things you can, and should handle yourself. But the preparing of year end statements and doing corporate taxes really needs a professional touch. There are more than enough things to have know without trying to keep up to date with changes in tax codes. As with your other team members, this is an expense, but one I feel is more than worth the cost. My accountant has helped me to save money. The ability to call up and ask a quick question, and get a knowledgeable answer has been invaluable.
A very important member of the Power Team is the contractor. Whether it’s a new roof, new windows, removing a tree, etc you probably can’t do everything yourself. It might take a few tries to find a good one. Ask around. When you do find a good one, stick with them. It is worth noting, that a Good contractor, and the cheapest price are seldom found together. If you are a regular customer, I have found that good contractors are fair.
Are these all the possibilities? No. What ever area you are inexperience at, you should have someone experienced in that area who can help you.
As I said when we started, you can’t know, or do, everything yourself. Some things you’re not even allowed to do yourself. When you call on a professional for help, you need to expect to pay for that help somehow. I have found that if you tell people that they are part of your POWER TEAM, and you use their services regularly, you get a better deal. If the members of your team all know that they are going to get all your business over the next several years, they are very reasonable when it comes to price. Also as you get to know each other, you can pass other business on. The contractor might let you know about a good fixer upper. The lawyer might be able to help with a pre-foreclosure.
As you work with your Team, LEARN from them. They are the best source of knowledge. They make you smarter, which makes you more money.