When I bought my first 8 unit I had never seen a lease. I had to find some generic one online and have a female friend I know that worked at an apartment complex meet me and new tenants to help fill it out.
I'd find workers for AC, roof, etc on Craigslist. Find insurance guys and learn about saving on trash contracts from others I met doing the same thing.
No harm in building a team but don't let that stop you when the right deal comes. You'll end up a perpetual looker -- never a buyer
It's probably more fun jumping in an figuring it out yourself, adding people to your team as you get overloaded and can afford them.
And when you do add people you can start with one virtual assistant at $200/mo for research and grow from there. Maybe your next person will be a local employee working 5hr/day Mon, Wed, Thurs.
You stand to learn more and spend less going at it on your own first.
Daniel Massicotte this is very true. Although I was thinking more along the lines of having property management lined up, a handy man, attorney, etc..
I guess I'm answering my own question, but I'd probably feel more comfortable finding some contacts beforehand rather than frantically trying to find one last minute.
I am in a similar spot - or was up until recently. I think it is good to go in with a plan and you can save you money long term - although it gets to a point where it is easier for you to do something to make that money and then just pay someone else.
Here is an example:
Just recently I decided to insulate my basement - it would take me a day of cursing, sweating and complaining that my back and knees hurt for the next 3 days for me to do it myself - so I reached out to a guy who I know that works for a company doing this sort of stuff everyday and asked him what he would charge. He responded with an absurdly low rate - to which I said that is too low - I ended buying him 2 tires he needed (I work in an automotive shop as my 9-5) and he did the work.
I can do a brake job in under an hour if I am hustling and make 200 dollars of profit there - so I would rather do a brake job and only spend an hour of my time to get the money needed to pay for the insulation labor.
No. Just do a deal...get started and figure it along the way. I also recommend you manage your first few deals for at least 6-12 months so you get an idea of what's involved to be able to better manage the manager down the road.
As you grow you'll add people to your team as you call it. I don't consider myself having a team per se, but I rely on many individuals ranging from my handyman, cleaning lady, attorney, flooring installer and so on. You'll find them.
When I bought my first 8 unit I had never seen a lease. I had to find some generic one online and have a female friend I know that worked at an apartment complex meet me and new tenants to help fill it out.
I'd find workers for AC, roof, etc on Craigslist. Find insurance guys and learn about saving on trash contracts from others I met doing the same thing.
No harm in building a team but don't let that stop you when the right deal comes. You'll end up a perpetual looker -- never a buyer
Brandon Hicks this was exactly the type of response I was looking for!
Even though I would like to passively invest, I don't think it would be a bad idea to try and manage it myself for the first 6 months as you said. I am a little worried that I would be overwhelmed though as I plan to work full time as I build a portfolio.
@Cody L. "No harm in building a team but don't let that stop you when the right deal comes. You'll end up a perpetual looker -- never a buyer"
I was thinking this exact thing. I haven't looked at any properties with a realtor because I have been afraid of being under prepared. I need to stop being so worried and jump in.
No one needs a "team" when their starting out in this business. This is much easier to do than most would have you believe. I've been investing for about 25 years, and I've never heard my name and genius mentioned in the same sentence. For most new investors the biggest obstacle is themselves. They read, they study, they listen to podcasts, they read some more, they attend meetups, they hang out online. . .a year later they are book smart but still haven't done a deal. Book smarts make dinner conversation; street smarts make money. My point? I have no idea. But if you want to buy real estate, simplify, streamline, and make offers.
Just get started. You "team" is best built as you go. You'll find that some people don't match your style, to expensive, good but not great, or are unreliable. Learn from that and do better next go around. I'm one year and four rentals into this thing and I've swapped several GCs, handymen, HVAC guys, realtors along the way. If I stuck with the first set of contacts (property #1) I started with I'd be paying too much. If I stuck with the handyman for #2 bc he was on my "team" my rennovations would drag on for months. My handyman for #3 is my GC for my current project. Have a fav realtor but she didn't have a deal for me in time for a couple of my purchases so I went with someone else. I'll definitely get with her first though on the next one. Hopefully my examples are helpful. Wanting to make the point that your team will evolve and there is little chance you'll get it right up front so don't let that be a hinderance to getting started. Use BP, local REIA, or other investors you know to get a jump start if you can. If not, it's ok to do some exploring on your own!
I think you need to determine which aspects you plan on outsourcing in your early deals and make sure you're recruiting now for those areas. Finding them after the fact means project delays, increased holding costs, and possible missed future opportunities.
I'm wrapping up a rehab of a long term hold an hour from me. I'm in month 6 of a 4 month project because I didn't have a complete team lined up.
It depends on your end goals. If you are buying a 300 unit building that needs a full renovation, then yes. If you are buying a single family property then it's up to you.
@Don Daniels Your examples were definitely helpful. I may use a hybrid of you and @Bob Crane's ideas. I see the benefits and disadvantages to both strategies. After reading the responses on this post, I'll probably go with the mixed approach. Thank you for your responses! @Ian Walsh
Building a team and a network is a marathon that ends with another marathon starting...it is an ongoing exercise. There is nothing like putting a deal under contract and having that "oh $h!t" feeling to accelerate your learning curve and team building. Many investors start with no team...and you have a bigger team than you think...this site and 600k members. Good luck.
You will get overwhelmed doing it yourself for a bit and that's a good thing.
I never even thought about REI until I bought a condo in Dec 2015 and rented it out. I still have a full time banking job and own a nightlife biz, but still managed to grow to 15 units and over 50 tenants since 2016. You learn so much more and save so much more money by doing things yourself. I think its a good growing pain and you'll be much more adept at pricing fixtures, jobs, etc. when you DO hire it out.
@Michael Carbonare Great Advice! I'm in the same boat as @Denny R. and have been wondering the same thing. Hoping all will fall in to place as I "jump in" with my first flip.
Too many people never get started investing because they're too busy out "building a team" instead of "buying a house." When an investor calls me or emails me and references "team" in any way, they get put at the bottom of the pile because I've never met one of those folks who actually moved forward with investing.
Just 1 reason that it doesn't make sense to focus on "building a team" before you "buy a house" is that you don't know who you need until you know what you need to get done. An attorney is only needed to draft your LLC docs if it's required in your state or you can't figure out how to do it on your own (at least in Ohio, it's super easy). A CPA isn't needed until you've already done a deal. A contractor isn't needed until you have a job for them to bid.
Gurus talk about "building a team" first because they know (I suspect) that most will spin their wheels doing that for long enough to milk them for a few thousand extra dollars in "coaching." You'll learn far more doing your 1st deal than any coach, guru, expert, website can ever teach you. Get out there and do it!
You will absolutely learn more doing things yourself at first. My first property was a house hack, so I got to learn how to be a landlord and take care of a house all at once. My biggest mistake was not blowing out the sprinkler system before winter! It's a mistake that flooded my basement and ruined all the sprinkler valves and backflow preventer. But, what I learned was how to dry out a basement, repair a sprinkler system and winterize it, and what kind of effort it takes to do all of that. Costed me about $200 and a couple weekends of labor. I'd say my time is worth a lot more.. so maybe a grand total of $700? Regardless, the knowledge gained is priceless. If it ever happens again, I'll have a feeling of what price I'm willing to pay to remedy the problem.
I just noticed this post is now in the trending discussions. What I thought seemed to be a rather elementary question, seems to be stirring up some discussion! I don't have a lot of experience to help people with, but hopefully this will help additional newbies like @Kristi Davis and myself in the future!
Denis Roux It never hurts to have a basic team in place. I would suggest going to your local REIA and finding out the people who the Investors are using. People such as investor agent, title attorney, inspector, GC, lender and insurance broker are good to have upfront. The rest you can build as you go.
I hope that helps!