Business Management

How Do You Know You Have the Right Advisor as a Real Estate Investor?

Expertise: Business Management, Mortgages & Creative Financing, Landlording & Rental Properties, Real Estate Investing Basics, Personal Finance, Real Estate Deal Analysis & Advice, Commercial Real Estate, Personal Development, Real Estate News & Commentary
228 Articles Written

Often, you will hear people say that you need to check with your “trusted advisor.” Now, that can mean your attorney, accountant, financial planner, or even a home inspector.

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You might even hear people talk about some of the things they do before hiring someone. Maybe they sign engagement letters and NDAs (Non-Disclosure Agreements). I know I do today, and that’s something that I hadn’t done in the past.

Many of us are concerned with fees, but we should be more concerned with what we’re getting for those fees. Was the person you hired based on a referral, or did you find them in some other way? Did you set the right expectations at the outset, and do you have the right person for the right job?

For example, in the distressed mortgage business, we deal a lot with foreclosures, but it never ceases to amaze me how many attorneys don't know that you can foreclose from a junior lien position. It also shocks me when an accountant or financial advisor advises their client against having a self-directed IRA account.

Although these strategies may not fit everyone, I’m convinced that oftentimes advisors give this advice because they are unfamiliar with them and don’t want to be perceived as ignorant. Instead of saying, “I don’t know, let me look into it,” they just tell their client it’s risky.


You Get What You Pay For

We all know why free advice is free, right? Although cost can be an indication of the quality of advice you’re getting, it isn’t always, and it’s definitely not the only thing to look at.

Once, when I was hiring a foreclosure attorney, I quickly realized his practice was a very small shop when the answering machine picked up, and I Googled his office to find that it was in a one-traffic-light town. Keep in mind, at the time I was trying to hire a foreclosure attorney for the whole state of New York. Obviously, this wasn't my guy.

Related: The Ultimate Guide to Finding Incredible Mentors

When I first hired one of my three accounting firms, I knew that I didn’t want an accountant who was too young, due to lack of experience. Still, I also didn’t want someone who was too old out of fear that he/she wouldn’t be keeping up with the latest laws and tax strategies, especially if he/she was approaching retirement.

What I really like to know, though, is not only if they are used to working with investors, but also if they are investors themselves in things like notes or real estate.

One of the reasons I hired our corporate accounting firm was because I knew they did a large, local mortgage servicer’s tax returns.

Who’s Driving the Process?

Sometimes, I think it has more to do with who’s driving the process. Many of us are reactive instead of proactive. In other words, we only seek out expert advice in times of need or duress, instead of putting the time in to educate ourselves on the space we’re operating in.

Knowledge is Power

When my partners and I first ventured into the note business, we looked to our advisors for information on how various processes worked, and we trusted them implicitly. Today, we do the complete opposite. We study the laws, regulations, and the foreclosure process in each state, and then we drive the attorneys. We tell them what the fee should be and what we expect of them based on what we know.

Also, in my experience, much legal counsel is better with legal advice than they seem to be with practical business advice. The same thing goes for accountants. Many are great at mechanically completing a tax return, but how many really interview you to dig deep into your overall situation and goals in order to help you plan future tax strategies? Many of them tend to operate in the present. I’m constantly asking my accountants questions about future strategy and tax implications.


Related: Are All of Your Advisors on the Same Page? An Interview with Business & Personal Planner, Matt Hausman

Work Smarter and Harder

Like Gary Vaynerchuk (Entrepreneur) says, there’s no easy way. He doesn’t believe in the myth that truly successful people can work smarter, not harder. He believes that you should work smarter and harder, but just do it at something you’re passionate about.

So, if you really want to be a successful real estate investor, it may be time to up your game and become much more knowledgeable in the niche you're playing in. Maybe it's time to learn more about landlord-tenant laws in your area, how appraisers come up with values, or how to work with contractors, banks, real estate agents, and property managers.

Perhaps it’s always time to up our knowledge base, setting ourselves up to be more successful. If we’re continually improving, it will likely be much easier to recognize the type and quality of advice we’re really getting from our advisors.

So, BP folks, how do you know the advice you’re getting is sound?

Let’s chat in the comments section below!

Since 2007, Dave Van Horn has served as president and CEO of PPR Note Co., a $150MM+ company managing funds that buy, sell, and hold residential mortgages nat...
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    Michael Dake Commercial Real Estate Broker from Huntsville, Alabama
    Replied over 4 years ago
    Very nice post, Dave. I agree whole-heartedly with your suggestion to be a better consumer of specialist advice. I have long maintained that society does not need more lawyers; it needs better legal consumers. The states license professional areas to ensure that non-experts are protected from the worst malpractice, but simply having a license does not mean the person is actually an expert. I don’t think that the title’s reference to “real estate agent” is an accurate summary of the post, though. The page title in the URL is better “good advisors.” Maybe the main title was meant to be “How do you know you have the right advisors as a real estate professional?” To the extent that the article can be applied to the investor-agent relationship, I recommend that investors keep in mind the basic purpose of the typical agent in residential markets: To help consumers buy and sell their homes-as-shelter. If you want someone who can work with you on buying and selling homes-as-income-producers, you need to find a licensee who does that. I would not hire an estates-and-wills attorney to defend me in criminal court. A very good message, whatever the title.
    Dave Van Horn Fund Manager from Berwyn, PA
    Replied over 4 years ago
    Hi Michael, Appreciate the kind words on the article. Looks like Allison addressed the title mix up above. And I completely agree with you as well in regards to the investor-agent/consumer-expert relationship. You need the right person for the right job, and the best way to find that person is by having a better education as an investor and a consumer. I always find it best to interview them, rather than the other way around. Referrals helps too! Thanks for reading. Best, Dave
    Allison Leung from Denver, CO
    Replied over 4 years ago
    Hi Michael: That was an error on our end, which has been corrected! Thanks for reading and for the keen eye.
    Patrick Desjardins Real Estate Investor from Amherst, Virginia
    Replied over 4 years ago
    I think the 80/20 rule is at play big time when it comes to professionals. I noticed that many of the attorneys are just average.. not exactly the superstar you’d hire to present your case in front of the supreme court. Some of them even seem like they couldn’t care less whether they win or lose your case as long as they keep receiving their $200/hour. On the house I’m currently working on.. we were doing an eviction and offered the owner some money to leave the house in good condition. I told the young attorney we should have it in writing and inspect before giving the money, as we would do in a deed-in-lieu, but he said we didn’t need to. I don’t think he understood. Well, lo and behold, the owner left with the water heater, HVAC/furnace.. so on top of setting us back thousands of dollars, we PAID THEM to do it.. I like the attorney, he’s a great guy, but it really blows paying for his education..
    Dave Van Horn Fund Manager from Berwyn, PA
    Replied over 4 years ago
    Hey Patrick, As always, thanks for chiming in. Although I’ve had plenty of experiences with knowledgeable and effective attorneys, you’re not alone. You’re paying for his education, but hey you’re paying for yours as well! This article took me a long time to write, and that’s because I had a lot of unfortunate scenarios happen to me on the advisement/litigious side of the business throughout my career. Some days, we still find it a challenge – constantly updating our attorney lists, screening new professionals, etc. Not to mention, monitoring professionals over time. But in the end that can only do so much especially when real life gets in the way. It’s just like with tenants or borrowers. You could have the most perfect tenant in the world who always pays on time but if they lose their job, go through a divorce, or have a medical emergency, what then? I’ve had the same thing happen with attorneys. So in some respects I can say it’s a challenge that will always be there but speaking from experience I can also say it does get easier. Also, not sure if the $200/hour figure was just an example or was a real life quote, but I can say many times it’s worth paying more money to an attorney that you know will get the job done right and just as importantly, get the job done fast so as to avoid the chance of running into problems in the future. Best, Dave
    Replied over 4 years ago
    You have mentioned it rightly , agent and consumer relationship should be more trustworthy , most of the time agent inflate the rates and they are not in favour of buyers but sellers. I read other articles also on other websites like freearticlessource , and the other authors almost say the same .