Real estate investing is a team sport. In the beginning, it will be difficult, time consuming, frustrating, and you may just want to give up sometimes. Right now, I am in the process of securing my first buy and hold deal, but it has not been easygoing. Breaking into a new market is a very difficult thing to do, especially for those of you who are newbies with no experience at all. The most important thing you can do when you are trying to break into new areas is make connections with people who can help your business succeed. There are key pieces to the real estate puzzle when it comes to putting together a successful real estate investment portfolio. In this post, I will address some of the most important real estate professionals to add to your team so that you can scale your business and become successful.
Real Estate Agent(S)
Having a great real estate agent (or a few) is an important asset when trying to build a successful real estate investing team. Real estate agents can do many things for you to make your life as an investor a lot easier. Firstly, agents have access to the local Multiple Listings Service (MLS) and will be able to find you on market homes for sale. While most of the homes on the market are retail (meaning they are move-in ready for traditional homeowners), depending on your market, there could be good deals found on the MLS perfect for flips and/or buy and holds. The current home I am about to put an offer in on is a distressed MLS listing that has been sitting on the market for quite some time. Because of some layout issues, current tenant problems, and other less than ideal situations, the seller is very motivated to sell and is willing to take a lower price and more favorable buyer terms to get rid of his headache property. This is an example of a great deal that can be found on the MLS, and great agents will be able to recognize these deals when they come across them. They then search a little deeper for the benefit of you (their client) and dig up pertinent information for you to consider about their discovered properties. I myself am a practicing real estate agent in the State of New York which gives me access to the MLS and all the data on there. This is a huge advantage of being an agent and is a reason I generally recommend going this route. Good agents will also be able to help you objectively analyze deals and provide input into their viability for you. Investing can be an emotional process, and a good agent helps level emotions throughout, making sure that you only make transactions based on facts rather than emotions. Lastly, great agents are great negotiators. They will likely help you get better terms on the sale and a better price than if you were to try to negotiate yourself with no experience. As a buyer, the agent is of no cost to you! They get paid from the sale of the house as a percentage of the purchase price forfeited by the seller in most instances, so you don’t have to worry about breaking the bank for this expense! As a caution however, great real estate agents are extremely hard to come by. There are so many out there, and the truth is, the majority of them aren’t good at what they do. This is common in the real estate industry especially for realtors, contractors, and property managers all of which we will touch on later.
Lender
Finding a great lender will help take care of the biggest thing that holds newbies back from investing, financing. So many people who don’t qualify or don’t want to use traditional finance assume that they need all cash to get into real estate. This could not be further from the truth. If you are looking for ways to get into real estate but have no money, I would recommend giving The Book On Investing In Real Estate With No and Low Money Down a read. Finding and utilizing an amazing lender to fund your deals will help make the process of closing on real estate a lot less painful and enable you to close quickly and efficiently. If you can qualify for a traditional bank loan and you want to pursue this route, you very well could find success doing so, however know that with this sort of financing there is 10 mortgage limit, so beware if you plan to scale this route may not be an option down the road. What I have found to be a better choice is to talk to portfolio lenders. Generally, they tend to care more about the deal you have for them to finance rather than you the borrower. They still probably will require you have a decent credit score (at least 700), and are in good overall financial standing, but they care far less about you the borrower than traditional banks. Another great thing about portfolio lenders is that there is no cap on how many loans you can take out with them. They can and usually will be willing to finance all your deals as long as you keep bringing them great investment properties and paying your mortgages. Developing a relationship with a lender of your preferred choice of financing can be a great addition to your team and help 10x your business by giving you access to excellent terms, lower interest rates, and possibly as many loans as you want.
Contractor
A general contractor is someone who will manage and operate your construction and rehab projects for you. They are responsible making sure projects run on schedule, and that everything that needs to be done is getting done. While these people are VITAL to your success as an investor, they are notoriously bad businesspeople. The key with contractors is to find the diamond in the rough and give them as many jobs as you can to keep them working. Contractors are likely to give priority to jobs that are bigger and clients that provide more volume, so it is in your best interest to give them business frequently and develop rapport. There are so many instances of contractors not showing up halfway through a project, not returning phone calls, and just being unprofessional. This is not all contractors however and there are many great ones out there, you just need to look hard. Adding a contractor who is fair, reliable, knowledgeable, and trustworthy to your team is something that is invaluable to the success of your deals.
Property Manager
Property managers are what makes real estate investing in buy and hold property passive. They are responsible for managing properties and the tenants in those properties. They deal with day-to-day issues, and usually have a network of people they can call for any given issue. They will also screen tenants and fill vacancies for you when a unit goes vacant. Like contractors, property managers are notoriously bad at their jobs. Finding a great one however is a necessary component to making your real estate investments passive. Great property managers save you time and effort by dealing with the smaller day-to-day issues managing a rental entails without consulting you for every single decision. They will make sure that your properties are fully occupied, or at least very close to fully occupied at all times preserving your cashflow and reducing your expenses. Great ones are a pillar of successfully operating a real estate investment business but beware and vet them well.
The most important thing of all
To ensure you have people who all understand real estate investing, it can be advantageous that you work with the above professionals only if they own real estate themselves. This will give them a better understanding of your needs to better serve you as their client. It is possible to find people who are great at any of the above jobs that don’t invest in real estate, but generally speaking the ones who will be best equipped to help you are the ones who invest themselves. The four team components listed above are the pillars that should make up your real estate team. This is not by any means an exhaustive list of what a great real estate team is fully comprised of, as there are many other pieces to consider to help grow your business. However, these 4 are the gateway to unlocking all the rest of your future team members. Put a lot of time and energy into making sure these four are one of if not the best around at what they do, and you will scale your business at an extreme pace!