How ready does your team needs to be?

Question

After reading multiple books and watching multiple  YouTube channels the words “assemble your team” continue to appear. The people that are deemed to be apart of a real estate team are as followed :

Mentor

Mortgage Broker

Real estate attorney

Escrow Officer

Accountant

Insurance Agent

Contractor

Realtor

Property manager

Handyman

Are all of these people necessary to have before you start investing? My investment strategy will be buy and hold so I’m sure I will need most of the people listed above. However, finding all of these people before my first investment seems unrealistic.

Lindsay Davis · Answer

Hi @Aurelia Pearson

I absolutely agree that assembling a real estate team is necessary for real estate investing. Especially important is having a reliable contractor. Anyone who’s spent time investing in real estate will tell you that no matter how good the rest of your team is, you won’t find much success without a good contractor.

Have you looked into turn-key investing? One of the biggest perks of working with a full-service turn-key investor is that you don’t have to put together an entire team - it’s all there.

If you have any questions about turn-key investing and what it includes, just let me know.

Lindsay

Lindsay Davis · Answer

@Aurelia Pearson the description provided by Mike is excellent. The only thing I would add is that, as he says, what exactly a turn-key company covers will vary. Which means that if you do go that route you should do your due diligence, ask plenty of questions, and make sure you know exactly what you’re getting into. That being said, turn-key is a great way to assemble your entire team all at once.

Aurelia Pearson · Answer

@Tim Jacob Thanks for the run down.

Aurelia Pearson · Answer

@Mike D'Arrigo Thanks for the information!!

Tim Jacob · Answer

Good turnkey companies offer convenience.  Because they do the leg work they will cut into profits.  Don't know what your goals are but keep that in mind.  Be careful with turnkey companies that tell you all you need is to sit back and collect the checks and you never have to go to your property.  There have been various lawsuits and issues with turnkey providers that operate hundreds or thousands of miles from their investors that never see there properties and think there are city maintenance and safety citations mailed to them.  Then they found out they were ripped off in a ponzi scheme.  It can be that bad.  Verify everything.

If you go the route of building your team it will be more work.  You will need an investors agent, a property manager, a title company, numerous contractors as you should not trust a gc to do some types of work unless they are licensed in that, along with an accountant.

That being said a good investors agent good also be a property manager and or contractor.  They might also know many good local lenders, property managers, title companies, and contractors in the area.  A property manager will have a handyman or a few they employ as well as knowing a whole bunch of general and subcontractors.  The realtor, lender, and title attorney are all incentivized to help you as they get paid at closing so keep that in mind when weighing there advice vs a pm or contractor when analyzing properties.

Getting an accountant and insurance agent can come later.  An attorney is always good but weigh the costs based on the scale you are on.  Its a lot more worth it if you have deep pockets and own 100 cashflowing units than just 2 or 3 rentals.

I think you dont need a broker relationship unless you are starting in the commercial space.  Escrow issues will most likely be handled by title.

A mentor is hard to find.  There is a lot said about it here on bp.  Honestly your buyers agent is free and they are incentivized to care through the seller paying there commision so getting the right person there would be huge for deal analysis along with other local connections.  You could really get some mentorship from them which would be free.  Asking questions on here is good but at some point the detail of your specific question will be better handled by some local to your investment thats incentivized from compensation.

Mike D'Arrigo · Answer

@Aurelia Pearson a turn key company offers properties where everything is already done for you and is cash flowing the day you close. You don't have to try to assemble a team and manage the whole process. Everyone defines turn key different but our definition is a property that has been fully renovate, has a tenant in place and is under professional property management. There are several very good ones here on BP depending on your market. Here are some things to look for and avoid in a turn key company:

• Don't allow financing or a finance contingency (it can be a good indication they are selling above market value)
• Don't allow for your own independent property inspection
• Are not realistic with their pro forma's (i.e. they don't include vacancy or maintenance projections or use unrealistically low vacancy factors)
• Require you to pay for any renovation upfront
• Sell only in cheap. low end neighborhoods
• Don't accurately represent the neighborhood/property classification
• Don't have consistent rehab standards for all properties
• Don't provide a scope of work for the property
• Can't provide references of repeat investors
• Require you to close before a tenant is in place

Aurelia Pearson · Answer

@Lindsay Davis I’ve never heard of turn key investments. I’m definitely mistreated in learning more about it. Thanks

James Wise · Answer

Not really. Don't need to put the cart before the horse. The 1st thing you need is a lender and then a real estate agent. Typically you'll want that real estate agent to be one who works for an investment focused brokerage so that PM and the like are all under one roof. These two team members should be able to guide you through everything else.

Aurelia Pearson · Answer

@Lynnette E. That sounds way more realistic. My fear was spending to much time and efforts trying to find my team before making an investment.

Lynnette E. · Answer

I personally do not have a 'team'.  I have a variety of people that I can use for things that need to be done.  No competent person in any of those categories will say 'yes, I want to be on your team!' when you have no properties and no work.  They may or may not be available when you need them.  And if you do put someone on your 'team' then do you trade them or dump them when they do not work out?  I keep my relationships pretty open with the helpers.  No commitments until there is work and a contract. policy, or payment amount accepted.

What would be better, IMO, is to have an idea of what disciplines you need on your team, and how to find people in this discipline.  So, know of a few different realty companies, try them out looking at property, as you use them you will find one or two that work for you.  Same with insurance, attorney's, etc.  For handymen and contractors, you just need to get referrals as you go, IMO.  The realtor will have handyman and contractor recommendations when you buy a house or look at one, so will friends.  Try some as you need work done, and keep several active because they get booked up and when you need to toilet fixed or the HVAC you can not wait a week.  Worse case, google is your friend!

If I were starting out, I'd skip the mentor.  Read yourself, network, do nto waste money on a mentor.

Find a mortgage company, or a few and see what amount they would preapprove you for.  Keep the information for them all.  When you find a property you can check rates, processing time, apprsaisal backlog, etc. and choose one for that deal.

Then I'd find a realtor and start looking for the property to buy.  As you are doing that talk with the realtor about escrow agents, etc.  Do one step at a time, always looking at the next step.

How ready does your team needs to be?

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