Finding a Team

I have taught leadership and management at two of the top ten universities in the country.  I say this not to boast but to show that I take the topic of leadership very seriously.  Leadership and team building are topics that fascinate and intrigue me. 

Through all my classes, mini-courses and consulting gigs there is one book that I assign to every single person: Good to Great.  For those of you unaware, Good to Great is a book by James Collins which discusses why some companies "make the leap" and others don't.  When he refers to "making the leap" he means becoming very successful in their business.  

The key lesson of the book, at least for me, is that you are only as good as your team.  If you don't trust your team or they aren't up to snuff, you will inevitably either fail or not reach your highest potential.  I have found this to be especially true in the competitive world of Real Estate where every good investor will fight and claw for an extra advantage.  That is why there are so many "gurus" and websites that promise to "get you leads fastest".  What are they promising?  A microscopic edge that they will likely fail to deliver because without the right team, none of it matters. 

So, let me get to the most interesting part of the book for me.  It says, first who, then where.  This means something pretty incredible.  You should pick your team and get them situated before you ever decide what you are doing.  I will add on to this, that you must be humble enough to admit your original strategy might not be the best bet. 

Allow me to talk about my original plan in Indianapolis and my new plan in Indianapolis.  I was originally going to do three to five flips a year and invest the profits into cashflowing properties.  After I talked to my realtor, one of the whos that I trust, he told me that while this strategy would work, we could do something much bigger and without a great deal of added risk.  

He showed me the numbers that said I should actually be investing in multifamily properties which would free up additional cash (due to better financing) to more than double the amount of flips I do every year.  So, I will end up with FAR more units, produce greater cash flow (as a total and % COC return) and have more resources to do flipping where the quick money lives.  

I asked roughly 100 questions and he was kind enough to explain the ins and outs of the deals.  I spent about 70 - 90 hours researching multifamily before becoming absolutely convinced he was right.  My strategy changed overnight.  No more looking for duplexes for cash flow, I want a minimum of 12 units and will sell everything else I can get my hands on if there is room for profit.  I LOVE this strategy so far.  It gives me more to do and I enjoy every second of it. 

So, what can we learn from this: 

1.  First who, then where.  

People don't often see this as applying to real estate.  The where is real estate investing.  If you believe this, your view of REI is FAR too narrow.  You can lend, wholesale, wholetail, buy and hold, flip, flip paper, etc.  Real estate is an enormous view.  Find the right people and they will lead you to the right strategy. 

2.  Be humble 

Your strategy might not be the best strategy just because you happen to have thought of it.  My strategy for tackling the Indianapolis market probably would have worked and I could have made 30 - 50K a year on buy and holds.  It would have been fine as my wife and I both have great jobs that pay pretty well.  Now, however, my new strategy will allow me to frankly retire whenever I want to.  I was wrong and my team was right...  unsurprisingly.  

3.  Show thanks. 

My realtor, who I will meet face to face for the first time in a few weeks, radically changed my view of real estate and has improved my life considerably.  Let them know how much you appreciate their help and expertise.  

4.  Shop around for a team 

I talked to about a half dozen realtors and wholesalers before finding my agent.  The fit wasn't right, they couldn't produce the results they promised or something else.  There is no shame in having to look around for a new team member as long as it is done respectfully.  

5.  Lastly, use every resource. 

@Joshua Dorkin and @Brandon Turner have created an incredible website.  Use it and learn about what your team recommends.  

Finally, I have not included the name of my realtor in this because I want to get his permission to tag him first.  If I do, I will add his name to a comment.