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
Tiffanie Vendryes it's definitely helpful! I went to my first meetup recently and already have contacts for insurance and investor-friendly agents. The meetings are very beneficial.
Jump in. It's more fun. Add on who you need to as you get to that point. If you spend months trying to develop and cultivate a team without going out and making offers, etc you'll probably lose a lot of momentum and may never get started. You don't need a team to call people with property posted on Craigslist, for instance. From personal experience, I went and found the people as the specific need came up.
The Order of people that I've found I had to bring on after getting my first property under contract was:
1- funding source (parents and credit cards for first deal) 2- contractor to help estimate rehab costs (initially, this was my business partner with construction experience) 3- attorney to close the deal and do title work, 4- commercial insurance agent.
since then, we've grown, and hired our first full time employees - maintenance and administrative staff for the rental business. An accountant as we needed to file taxes. It wasn't until my 4th deal, when I was selling a rehab property that I needed to find a good realtor. If you spend your time focusing on the things that will generate the greatest immediate income, that will guide you well for deciding when and what professionals to bring on!
This is great info, I've been pondering some of this myself. Ready to get started! (Though I think I will get a real estate agent on my "team" before I find what I've been looking for :)
This is an interesting conversation. I definitely have a team and couldn't do what I do without them.
But back when I first started investing in 2004, I didn't have much of one. And I didn't really stop and consciously assemble one either. My first deal was a BRRR (before I had any clue that it had a name or was a method or system), which I then I leveraged into purchasing my first 4 flip deals (closed all 4 on the same day). The team came as needed along the way.
What's that old saying? Necessity is the mother of invention? I think that definitely applies here.
Long story long, I am a research type of guy myself and no, I don't personally think making some phone calls to a few real estate attorneys or contractors is a bad idea in and of itself. But I think the point of most of the other posts in this thread is right on target - if you're at the point that you already know you need these people, you're at the point that you should be devoting a vast majority of your energy and time to looking for deals, analyzing them, and making offers.
So if you did decide you wanted to make some 'team building' type of phone calls, then I'd probably recommend doing that on Tuesdays and then spending Monday, Wednesday, Thursday, Friday, and Saturday (and better yet, the rest of Tuesday) identifying prospects, analyzing them, and making offers.
I would say at a minimum get a buyer's agent so you can see a good sample of the listings available (even if you don't end up buying off MLS). Also in near term a banking relationship, and a property manager, if you don't plan to self-manage.
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.
Yes. It's like asking should I plan things out before throwing a big wedding party. You need to know who is going to supply your cake, decorations, DJ, photographer, etc.
Interview and line folks up. It doesn't cost you much, if anything.
@Denny R. Depending on what kind of investing you are looking to get into it would be wise to find an attorney very early on. Everything else is mostly build as you go along.
One important question I have not seen asked, or maybe it was and I missed it: Is the investment you are thinking of local to you or far away.
If it is local, then roll your sleeves up and jump in. Still network and look to build your team at the same time, but you don't need them in place before you start. As mentioned, doing everything hands on will be a lot of work, but it is the best way to learn.
If it is far away, then your investment will live or die by the team you have in place, so you better darn make sure you not only have a team in place, but that it is a great team. In this case, I would literally spend more time and effort selecting your local team as I would selecting the market or even the property ... it is THAT important, especially your property manager. I don't recommend new investors invest remotely for the very reason that you will be so dependent on others to make or break your investment for you, but if you ignore my advice to don't do it then please do at least heed my advice to put your effort into building a great team.
At any given moment , you will never have a complete team. I am changing and upgrading my team constantly. Sine the RE economy has improved, I have lost a number of contractors. There are a lot more big jobs out there and they are more focused on those. That is alright by me they should peruse their own best interest as should I. You can always find people to work with.
I would be more concerned with the risk of just "jumping in". If you assume the worst, slow to rent, roof A/C replacement etc will you be able to weather the storm? There is a very cavalier attitude towards, just jump in. Do your research, learn and be thoughtful about jumping in. Getting it right is more important and going fast, unless you have limitless resources and can afford to make mistakes.
Great question! Of course, it will be much easier if you have a support system in place for your investing endeavors, but it is not 100% necessary.
In my couple years experience, I've learned that the two major obstacles you'll most likely come across are: locating the deal for you, and finding a reliable contractor you can trust.
In terms of locating a deal, I would offer on everything under the sun. I think I'm at about a 7% conversion rate from offers vs. actual purchases. You need to be out there knocking on doors, talking to neighbors, sending letters and offering on all of your local MLS deals. You really don't need a realtor for this because a lot of them aren't 100% familiar with the investing game.
When it comes to finding a reliable source to perform your repairs, that will all be from word of mouth. Find other investors in your market who are actually doing deals and see if they would refer you to anyone they've used in the past. Always ask for references from these prospective contractors, and always have them show you photos or take you to a current project of theirs. I have a rule that we always follow: you need at least 3 contractor bids minimum for each deal you're looking to undertake. That will ensure that you're getting the lowest price, and expose you to multiple contractors at once. Don't always go with the lowest bid, though! Sometimes the higher bid's contractor is the real deal, and you can rest assured that your money, time, and deal are in good hands!
Yes. It's like asking should I plan things out before throwing a big wedding party. You need to know who is going to supply your cake, decorations, DJ, photographer, etc.
Interview and line folks up. It doesn't cost you much, if anything.
What winds up happening is that too many investors go find a DJ, photographer, and wedding planner before they've even got a boyfriend or girlfriend - to continue your analogy.
I think have a team is very important but they should be built of people you have had good relationships and know you can trust then to do the job with some oversight. Never just hire the first contractor, accountant, or other professional. They should align to your values as a person and a business.
If you are uncomfortable to go alone on a first deal then I would suggest finding someone who has an active deal flow in your area of interest and maybe working for free (experience). You never know! They may be one to help you catch a bad error in your assumptions or direct you towards a deal you would have never sought. The experience might be able to help you better evaluate who you would want on your team.
Teams over all take good management and leadership to help progress in a fashion that you would want and to meet guidelines. I think another approach would be as have clear goals for each member of the team as part of an interview process. This could be a simple document that lays out your expectations and what are the grounds for dismissal. Are you willing and able to dismiss a team member for negligence? What actions or recourse would you follow to ensure you are protected?
Overall, Yes! A team is valuable and a great asset but it can be like a marriage. You to know who they are and what to expect.
We kind of backed into being landlords, and didn't have anyone pulled together. I'm struggling now to take the next step without having a good idea how to do the rehab in a BRRRR. I know enough now to avoid having a house sit around empty while I figure it out.
One thing I would recommend, however. Have your financing lined up before you make an offer. It was tough to find lenders willing to do small mortgages for investment, so I had to really scramble. Some lenders will only allow you up to a max of 4 mortgages, and others will give you another 4, but only up to a max of 10, including your home. Luckily I used up the "only 4" lender first, and have moved on to a "second 4 to a max of 10" lender now. Hope that makes sense.
@Chris Purcell I was speaking of property manager, contractor, etc, but I've actually come to realize after meeting with a few contacts that they all have a network of people for me to reach out to. This has all become way easier than I expected. Of course I cannot vouch for their work, but it's all pushing me in the right direction!
thank you all for posting your answers to my question! I have read all of the responses. It's very interesting to see everyone's opinion based on their past and current experiences!