I’m asked all the time what I attribute my success to. I’ve sat with this question for a decent amount of time, pondering what was to thank. Was it my education? Was it bravely picking the right partner? Was it having an infinite amount of support from my family? Indeed, it was all of that. But all of that is part of the bigger answer. My success comes from having the best team and I’m sure of that.
Your investing team includes your family, your partners, your teachers and so much more. I believe that if investors spent as much time building their team as they do looking at properties and their numbers, then they would be as successful as Ross and I at MC Companies.
In the business of investment real estate, you can’t afford to act without a team… the right team. In fact, it’s impossible to succeed on your own, and this is the biggest mistake I see with new investors. When people are just beginning, they try to cut corners and save money and replace their team with their own hard work and long hours. They are failing to build a team which is an investors most important resource and biggest asset.
Having a team of experts on call is not free and it is not cheap. Without experts on your team, deals take longer to find, evaluate, and close. Do-it-yourselfers miss details that experts would see in a minute, like clauses missing in contracts, obvious defects in construction, and hundreds if not thousands of other issues experts would point out up front. An expert team on your side means you’ll have fewer surprises as you wade through the sometimes turbulent waters of purchasing and managing a property.
A related mistake new investors make is to build a team, but not the best team. Often an investor will fill a role with a friend or family member. While this can be great, if the investor is merely stocking the team with the easiest people he/she can find, the chances of success are minimized.
Do not be afraid to invest time and resources into finding the right team members. Interview a number of different people for each position. Once you find one team member ask him/her for recommendations for other team members. Ask your friends and family for recommendations too. You’ll be surprised, and impressed, with the recourses that they will help you come up with and the contacts they have.
While the skills and experience is the first thing you will be looking for when building your team, there are other qualities I would recommend as well:
- Price and fees. If you have two equally qualified candidates, then you’ll want to look at their fees and when they get paid. Salary versus commissions.
- Honest communication and the ability to listen and speak in a debate.
- Open-mindedness and the ability to follow your lead even if it isn’t the direction they want.
- Similar values. This is important in business and its also important in many personal issues.
- Accountability and the ability push each other to achieve objectives.
Teams do not have to be set in stone. They also do not have to be large. You just need a few key team members to get started—an attorney, an accountant, a real estate broker, and a property manager.
- Your own attorney. Before you do anything, get your business set up correctly.
- Your own accountant. This person will be able to give you tax advice based on your own personal financial situation.
- Real estate broker. The real estate broker will help you understand your market and help you find properties.
- Property manager. This person will help you assess the properties you are considering from an operational perspective. They will give you a solid idea of what you are getting into.
In addition to the four teammates you’ll need to get started, there are many more that you will need at different times. The following lists include all the people and professionals you will eventually have on your team and how to evaluate and select them. While the lists may appear overwhelming, understand that you will accumulate these contacts over time, and you don’t need all of them at all times.
- Real Estate Attorney. Your attorney will help you wade through letters of intent and purchase and sale agreements.
- Lender or mortgage broker. Find a lender or broker who understands the business of property investing. Not only will they lend you money, but they will also provide you with leads on other properties that are ripe for sale.
- Investors. By communicating your goals and doing the work of building your team, you should find several sources of equity who will entertain investing in rental property.
- Contractor/Rehab specialist. Contractors see things you don’t when it comes to walking a property. Before I sign any deal, I have a contractor perform a detailed inspection and file a report of all critical and noncritical repairs.
- Accountant who will help you not only with your own business finances, but also help you put together profit-and loss projections for the properties you are considering.
- Appraiser who specializes in both your market and the types of properties you are targeting. This professional will help you determine the appraised value of property before and after the sale.
- Architect who can help you with new design ideas and renovations to increase curb appeal and operations performance.
- Insurance agent who will help you place the proper protections when you own the property. Having the right coverage for the right price will be necessary if you acquire property.
- Property tax consultant to ensure that your taxes are being assessed fairly and accurately.
- Income tax consultant. The tax laws are complicated and it is always good to have the advice of someone whose job it is to keep up with tax law.
- Environmental company/industrial hygienist. If you suspect mold, asbestos, or any other environmental hazard, you’ll need one of these to help you through the process of testing and removal if necessary.
- Surveyor. As you are rehabilitating a property, you may need the services of a surveyor to assess boundary lines, elevations, and other such matters.
- Structural engineer. Your contractor may find a problem that jeopardizes the structural integrity of the building. Call in a structural engineer, who will analyze the problem and recommend a strategy to repair the building.
Teams are just that: People who work together to get the job done. The team you pick should be on your side and have the mentality that when you are successful, they are successful. Keep searching until you find people whose goals and business methods vibe with your own.