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SHOW NOTES FOR EPISODE 600: THE IMPORTANCE OF YOUR REI TEAM
Previous episodes of our 10 steps to Real Estate Investing Success series have thus far included:
- 590: Is Real Estate Investing For You?
- 592: What Type of Real Estate Investing is For You?
- 594: Building a Winning REI Strategy!
- 596: Knowing Your Numbers
- 598: The Business of Real Estate Investing
The Importance of Your REI Team
Real estate investing is not a solo sport. To be successful, it takes a unified, talented and committed team. In this episode, I will talk about the importance of putting together a strong and effective team and who those key members are that will make up your ideal real estate investing team.
To be a successful real estate investor, you will need a competent team to help you out. A team is critical to real estate investing success. Surrounding yourself with the right people can make all the difference to your success. Success in real estate comes from a team effort. It’s all about relationships, relationships, relationships.
And, if you are an out-of-state investor, you may have multiple teams. A team where you live and teams in each state you invest in.
An effective team of experts is not cheap and this is not a place where you want to count pennies. The right team members will cost but in the long run they will ultimately save you thousands upon thousands of dollars.
You can waste all kinds of valuable time trying to do things yourself. Do-it-Your-selfers can miss all kinds of details that an experienced expert would see in a minute, like critical clauses missing in contracts, obvious defects in construction and hundreds, if not thousands of other issues experts would point out upfront.
I’m going to share some of the key people and professionals you’ll need to help you with all the issues you’ll face while investing. There are several important things you need to be successful in real estate investing, one of which is a great team.
Partners
Before we go into your team members, I thought I should address the idea of a partner or partners as, perhaps, your first real team member(s). There are multiple skills required to be a successful real estate investor but one person, more than likely, won’t have ALL of those skills. Sometimes it makes more sense to partner who do and who possess those complementary skills.
For example, as we discussed in our fourth 10 Steps to Real Estate Investing Success series episode called “Know Your Numbers,” numbers, detailed analysis, and underwriting are all critical to your real estate investing success. Are you a numbers person? Do you enjoy doing a detailed analysis on spreadsheets and generating numbers that will help you determine if you have a good deal or not. Maybe that’s not your gifting. Or, are you more comfortable doing presentations before groups of people, networking at events, or selling your project to bankers and potential investors? You may be saying I can do that but I don’t think I can do the other thing. And that’s where a partner comes in.
Some of the most successful businesses were started by partners. Names:
Names like:
- Henry Wells & William G. Fargo
- William Procter & James Gamble
- Orville & Wilbur Wright
- Bill Hewlett & Dave Packard
- Steve Jobs & Steve Wosniack
- Bill Gates & Paul Allen
- Larry Page & Sergey Brin
- Ben Cohen & Jerry Greenfield
These were folks who had complementary skills. They are the people that Gino Wickman refers to in his book Rocket Fuel that studied exceptional companies who have partners who fulfill two key roles: The Visionary and the Integrator. It’s a powerful combination with the right people!
Or sometimes, a real estate partnership may just be a simple has the “money guy” and the “worker bee guy or gal”. You may not have the money, but you have the time. Or, conversely, you have the money but don’t want to spend the time.
A business partner can be an invaluable team member. Partnerships are either destined for success or doomed for failure right from the start. But it’s well worth considering. Here are some good qualities to look for in a partner:
- Healthy debate: You should have room for debate before decisions are made. Someone to bat ideas back and forth with.
- Open-mindedness: You shouldn’t have to spend valuable time continually convincing your partner of your goals
- Commitment: You should be committed to each other and your goals
- Similar values: You and your partner should share the same values
- Accountability: You and your partner should push each other to achieve objectives and have mutual accountability
Outside of a potential partner, there are other key team members you should have. Here are some of the players who should be on the winning team:
Your Mentor
A very successful entrepreneur needs a good mentor. A guide. By being closely trained under the watchful eye of one smarter and more experienced than us, we can only get smarter and do better. Finding a good mentor early on can establish a good solid foundation for success!
Mortgage Broker or Banker
A mortgage broker can offer many options, but a banker can make the loan decision. They each have their advantages, and you could use both on your team. In either case, it’s important they understand what you want (fast closings, lower interest, corporate loans?, etc). You want someone who has the experience of working with other investors and who wants to see you succeed. They need to be creative and smart!
Accountant and/or Bookkeeper
Preferably a CPA (Certified Public Accountant. Your numbers guy or gal should be well aware of the ins and outs of real estate. Preferably, someone who is an investor like you. Come tax time, this is the person who will help you through the write-offs! Keeping good records and proper books for real estate investments is getting more and more complicated with all the tax-law changes. Find someone who understands the law, and understands what you want.
Real Estate Attorney
Find someone familiar with the laws and legal customs of your investment region(s), and that has experience with the type of deals you intend to do (If you are buying rentals, he or she should be familiar with doing evictions, for example). It is really important to have someone on the team who can go through contracts, knows about asset protection, understands business law and who knows the legalities of all your moves.
Good Real Estate Agents or Brokers
A broker or agent with experience in the areas you invest in and that has access to off-market deals, the MLS (Multiple Listing Service) and other “insider property info,” can be a great help. If he or she is a seller’s agent, he or she can still ethically bring the best deals to you once you’re identified as a serious buyer.
Appraiser
A good appraiser can give you an accurate valuation of a property, but they can also suggest ways in which you can most efficiently raise the value of a property. Find someone that will talk to you.
Inspector
Some states make it too easy to become an inspector with little experience. You may want to find one that is or used to be a contractor or engineer, so he can find the problems AND give you some idea of the cost of repairs.
Insurance Agent
Good ones will understand what you want, and find ways to save you money. Insure all your properties with one agent, and you’re likely to have discounts available, as well as better service. It is always better to have an insurance rep that is looking out for you when things hit the fan.
Escrow Officer or Title Rep.
They’ll usually be with a closing company. They can also be an attorney. Find someone that’s efficient, and can explain things clearly to both sides. If he or she is confused by a slightly creative contract, they should be educated easily or be replaced. Having a good one on the team helps to close deals that much quicker. You always want people looking out for YOUR interests.
Property Manager
Be certain that the property management company you hire has experience, is responsive, has a good reputation and will have time when you call. Good property managers can tell you what you should get for rent in a given area BEFORE you buy. If you are an out-of-state investor, this person can make or break your business.
Other Team Members
Contractor
The good contractor seems like the hardest one to find, but can often make or break your profit margin. You want someone who gets things done on time and under budget.
Great Handyman
Someone to take care of the little things that come up on a daily basis.
Cleaning Person or Crew
When you have a trusted person or crew ready, it means a fast turn-around when you buy a rental or rehab project.
Supportive Family & Friends
Having the support and backing of loved ones is important in any endeavor.
Your Passive Investment Team
A final note about non-team investors…
You may be thinking, but I don’t want to be an active investor. I would prefer to be a passive investor and invest in other people’s projects. And that’s fine. However, if you are putting significant funds investing in syndications, for example, aren’t you going to be concerned that your investment will not only come back to you but will yield a good return as well.
The way to help achieve that is to surround you with other investors who have been investing for a long period of time, like the same projects as you and knows the good and not so go players. Where do you find these people? Places like BiggerPockets, referrals from other reliable sources (your CPA, attorney, realtor/broker) or through investment clubs you can join and become active in.
In Conclusion
If you’re serious about successfully investing in real estate, start building that team right away. Investing in real estate is a whole lot less stressful and more profitable with a good real estate investment team. Assembling a winning powerhouse team will not happen overnight, but once together, they will give you the backing, support and help you’ll need to make your real estate investing dreams come true.
References:
- Building a Powerhouse Real Estate Investing Team
- 328: Assembling a Powerhouse Real Estate Investing Team
- 020: Building a Great Out-of-State Team
Good Books:
- Traction by Gino Wickman
- Rocket Fuel by Gino Wickman and Mark C. Winters
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