Follow Us on Social Media

email icon rss icon linked.in icon google plus icon twitter icon facebook icon

The Five Fundamental House Flipping Team Members

by Michael LaCava on March 23, 2014 · 16 comments

  
House Flipping Team

Many people think house flipping is a solo act.

It’s nowhere near true.

It’s more like being the conductor of a symphony.

At times it may be more like conducting the Boston Elementary School Orchestra than the Boston Symphony Orchestra…but it’s definitely not a solo act by any stretch.

Like any good orchestra, you build it one instrument at a time. And you build it primarily through networking.

To build the orchestra you have to be actively involved in the real estate investing community through REIA meetings, Meetups and local business networking groups such as BNI.

At these events, you’ll need to look for your big five team members.

Although there can be many more than these five on your team, you will need to focus on getting these five fundamental team members who will be able to assist you in the following areas:

1. Real Estate Attorney

When it comes to anything in life, be it the new TV you just bought, to the real estate attorney you use, you get what you pay for – which although everyone knows this to be true, not everyone follows this mantra.

If you buy a cheap shirt, it will most likely tear or shrink in the wash after a few washes. Likewise when it comes to an attorney to handle your real estate transactions, it is integral to your success to hire an attorney who really knows their stuff. You may not want to look at the expensive bills in the beginning, but if you get into a real pickle later on, it will likely cost you a whole lot more if you’ve gone the discount route and hired an unskillful attorney.

Don’t handle your first real estate transaction without the advice of an attorney; if you do you run the risk of making mistakes that can be irreversible and permanently damaging to your career.

2. Certified Public Accountant (CPA)

Similar to hiring a real estate attorney who knows their stuff, you also want to hire a capable CPA. The accounting invloved in house flipping can be complex and you want to have someone on your team who really knows their stuff.

Although you may think you know the tax laws pretty well, its better to have a solid CPA who knows what can be deducted, what can be expensed and what needs to be capitalized based on your tax laws. In the United States, these laws change yearly – so its very difficult for anyone less than a full time professional to understand all the nuances and intricacies involved in proper tax filing and best accounting practices.

3. Insurance Agent

Like the two mentioned above, you cannot possibly know all the insurance ins and outs. The insurance agent who is on your house flipping team should have a full understanding of all of the technical elements of your business structure, how your properties need to be insured and should be able to give you good advice on the various types of insurance needed for successful real estate investing.

Invariably, house flips warrant different types of insurance than straight buy and hold properties, and although the differences may be small, don’t try to become the expert. Enlist an expert instead. A good insurance agent will know exactly what kind of insurance you’ll need; from homeowners to builders risk to liability and flood insurance – and can save you many headaches and heartaches down the road. Not only that but a good agent can serve you as a trusted resource when you run into difficulties or need something integral to one of your deals when in a pinch.

4. Contractors

Although many house flippers like to do all the construction themselves, I don’t recommend this strategy unless you really truly have a passion for it. I just find that doing the rehab myself ends up costing me more in the long run. When I was first starting out I did much of the rehab myself, but I no longer do now.

As is the case with any of the other members of your team, it is important to hire the best contractor you can find and most importantly have faith and trust in their competency and abilities.

Simply put, a general contractor is a singular entity or individual who oversees and runs the complete rehab phase of the project for you. You can also use them to help you determine costs when you are looking to buy your first property.

In essence, they do all the rehab work and are responsible for hiring and managing the rest of the subcontracting team you’ll need to get the job done. The general contractor earns his money by taking a percentage of the total fee of the rehab project in exchange for his expertise and organizational skills.

The subcontractors are tradesmen like plumbers, electricians, framers, drywallers, floor guys, roofers and finish carpenters. Although you very well may go through a few contractors before you settle on one who is both competent and trustworthy, finding a solid contractor will help you keep your rehabs flowing smoothly and keep all facets of your operation moving forward, even when you are just beginning.

5. Real Estate Agents

A good real estate agent, when it comes to buying as well as selling in your market, is worth their weight in gold.

Although you may end up working with several real estate agents, you’ll ideally want to work with a small number – all depending on your market. You also may end up working with different kinds of agents who specialize in a particular facet of real estate.

For example, there are a number of real estate agents who call themselves REO  or real estate owned agents. These REO agents  concentrate their efforts on short sales. A short sale is a sale of real estate in which the interest from the selling of the property will “fall short” of the balance of the debts against the property. These agents work with banks to sell a property for the seller before it goes to foreclosure.

Although many real estate agents may tell you that they specialize in different kinds of real estate sales, you’ll want to interview them all and make sure they really do know what they are talking about when it comes to these sub-niches of real estate.

Most importantly at your networking meetings, you’ll invariably meet people in all these areas – and its up to you to talk to them, understand what kind of people they are – and if they are knowledgeable and can help you, then leverage their knowledge and help formulate your house flipping team.

Beyond The Big Five

Now that the big five team members are covered, it’s important to remember that there may be other professionals that you may need to flip houses as well. These include wholesalers, investors and even banks – all of which we’ll cover in subsequent sections.

But for now, getting your big five in place first is the most important.

 What do you think? Let me know by commenting below.

Email *
  



{ 16 comments… read them below or add one }

Dena March 23, 2014 at 1:40 pm

Awesome! got 3 o f 5 done so far and a few more! Was not thinking about the Insurance Agent… thanks! Working on vetting contractors.

The investors… just lost on that one for now… we will see after I go to some local REIA meetings.

Reply

Michael March 24, 2014 at 4:01 pm

Thats great Dena. Other Investors will bring you deals as well. I know hard to believe but it happens but after you have put your time in and earn the trust.

Reply

Carlos Reinoso March 23, 2014 at 5:30 pm

I agree with you Mike 100%. I have been a Real Estate Agent for many years and an Insurance Team Member with the kind of knowledge of which you speak. How Awesome that I could do two of the Five and also be an Investor! I don’t have Contractors but I have Closing Attorneys that I always work with.

Now, how could I acquire some Financing? My services are available but I’d really like to do it for myself as well. I write Offers that are generally accepted and use all the Investing rules. I’d really appreciate your input.

I haven’t posted in a while but this Article really drew my attention. Thank you for posting yet another great Article!!!

Thanks again. Carlos Reinoso

Reply

Michael March 24, 2014 at 4:07 pm

Many ways to acquire financing either through banks, private money or hard money. Hard to write all the ways and methods in this comment section. Check out my site for many ideas and my blog articles hear on BP as well as other bloggers on the subject. All the best. I do business with all 3 options & depends on different factors as to why and when. Some times banks make sense when you have more time to close vs hard money you can get in less than a week. Sometimes private money then refi with bank to go long term for rentals.
Remember never ask for money only offer opportunity. It takes some time but once you start and build upon your experience and credibility money will be the least of your concerns.

Reply

Dena March 24, 2014 at 5:03 pm

oh gosh Mike! I am going to have to read that one a 1000 times! lol! My head is exploding.
would you have the links handy for the articles or area you mention. I have not yet had time to learn the navigation for this whole site yet….
sorry… multi-tasking many things for the next few weeks since I started.

;-)
dena

Reply

Michael March 24, 2014 at 5:12 pm

http://www.biggerpockets.com/renewsblog/2014/02/02/finish-fund-house-flips-pitching-anything-done-21/

Here is one. Just click on Mikes Posts on the right hand side of any article and you will also see all the other bloggers and you can do the same for them.

Dennis Lanni March 23, 2014 at 7:56 pm

I would switch out the CPA & Attorney to the B list. You do need them but my top 5 would be (in order of importance): 1) the buyer 2) rehabber/project manager 3) fundraiser 4) bookkeeper 5) agent.

Reply

Michael March 24, 2014 at 4:10 pm

Sure Dennis. They are all pretty important for sure. Thanks for your opinion.

Reply

Adrian Tilley March 24, 2014 at 10:28 am

Good overview. I’m curious why RE attorney is on the list. I know in some areas they are required for closings – is that the thought? My impression is that unless they are (not here in CO) they are generally only needed when something goes wrong.

Also, regarding insurance agents, the good ones are great to have, but in my legal practice I have had many issues with agents selling coverage with serious issues, selling the wrong type of coverage, etc. I’m not sure what the solution is.

Reply

Michael March 24, 2014 at 4:18 pm

Hello Adrian,
Regardless whether they are required or not does not matter to me. There are too many things that could go wrong if you don’t have an attorney representing you in the transaction especially with all the title problems in the foreclosures. In MASS only attorneys can issue title insurance and certify so it is not an option when it comes to the title of the property. I feel when you are dealing with hundreds of thousands of dollars in transactions you should have good legal representation.
Of course you could get a bad attorney like any other business and like you mentioned insurance.
Just because someone hires and insurance person to put together a policy doesn’t make it the right policy as you found out.
When assembling your team do your due diligence and get references for sure.
Thanks for your comments

Reply

Dena March 24, 2014 at 5:01 pm

Mike,
Are you saying that your attorney needs to be part of the transaction? Can you maybe give me a bit more of what that looks like and how it would play out?

Would this be the same for wholesaling?

thx much!
Dena

Reply

Michael March 24, 2014 at 5:10 pm

Only when we get an offer accepted in most cases we then pass the property to our attorney to do the title work to make sure the title is marketable so we won’t have any problems with it.
Wholesaling not usually because the investor will do the title work if it comes back bad you as a wholesaler would not profit on the deal if the title couldn’t be fixed.

Sara Cunningham March 24, 2014 at 3:11 pm

I’m also curious about Real Estate Attorney being an essential part of the team you need to assemble. I have all of the others on my team. Except I don’t use Insurance agents though I go direct to companies since I have several policies. I had a bad experience with two different agents so now I just do it myself.

Reply

Michael March 24, 2014 at 4:19 pm

That’s good Sara that you able to navigate the insurance yourself directly and unfortunately you had to do it after your agents messed up. That is the whole idea of having a good agent.

Reply

Sara Cunningham March 24, 2014 at 4:43 pm

Michael to be honest since I live overseas right now and invest in the US it’s just easier. Most of my problem with the agents I used was that they couldn’t get anyone to insure me because of claims. Living in Italy right now it’s easier to do it direct. When I come back to the US I need to get that sorted. I would add another person to my team a great Property Manager, they have been a life saver for me being a long distance investor.

Reply

Michael March 24, 2014 at 5:06 pm

Absolutely agree there! I have a great property manager that handles my properties in another state. Makes investing outside of your travel area so nice when you can count on a good property manager for sure.

Leave a Comment

Comment Policy:

• Use your real name and only your name in the field designated for your name.
• No keywords allowed as anchor text in the name or comment fields.
• No signature links allowed under your comments
• You may use links in the body of your comment, but it must be relevant to the discussion at hand, and not merely be some promotional link.
• We will have NO reservations about deleting your content if we feel you are posting merely to get a link without adding value to our discussion.
If you add value, but still post keywords, we'll use your comment, but remove your link and keywords.
• For more information about acceptable practice, see our site rules.

Want your photo to appear next to your comments? Set up your Gravatar today.

Previous post:

Next post: