Who Do You Need In Your Real Estate Investing Team?

The foundation of any good real estate investment is a great team. A great team will help you to find the right property, get the financing, protect the assets, and manage the assets when you have them. A bad team, on the other hand, could turn a great potential investment into a complete loss.

If any member of your team is weak, you will have a weak foundation to build on and your investment may not work.

Who Do You Need on Your Team?

1. Broker/Agent

A real estate broker or real estate agent will help you find, buy, and/or sell your property (at the appropriate time, of course). You want to choose an experienced broker/agent who really knows your asset class.

If you are purchasing anything with 5 or more units, work with an experienced commercial real estate broker. These types of deals are very different from residential (1-4 units) and you want someone who can navigate this space with confidence, insight, and experience.

A good experienced broker/agent will be invaluable to you. They will:

• guide you to properties (even some that are off-market (e.g., they have not officially been put on the market for sale),
• know the market well,
• help you to find the right deal for you, and
• have referrals for the rest of the team.

2. Property Manager

A good property manager will help attract and keep great tenants. They will keep things running optimally with little input from you so all you need to do is collect checks.

Bad property management, on the other hand, can quickly sink your property's income and value. A property manager who chooses to lease to bad tenants who don’t pay and/or vandalize a property, or who causes good tenants to leave because the manager is rude or doesn’t handle maintenance issues promptly, can take down your smoothly-running investment ship in no time – often before you are even aware there is a problem! Another property manager flaw to look for: a manager that is not paying bills on time and/or antagonizing your vendors.

A great property manager is also helpful BEFORE you purchase because they know the market very well and can help steer you in the direction of good deals and/or steer you from bad deals. A property manager can also help you work out a budget to ensure you have sufficient funds, and connect you to other members of the team.

3. Lender

You might not think of your lender as being your partner, but they are. The lender is the bank or hard money lender that gives you a loan to purchase the property. They will likely be the biggest investor in terms of interest in the property!

A lender will make sure that you have enough money to be successful. For a residential loan (1-4 units), the lender will look at your credit score and income (including 75 percent of the rental income from the property) to assess your ability to take on the loan.

A commercial lender will make sure that you have a winning business plan and have enough money to be successful; if the deal is good enough they will sometimes help you find the right partners too to make it happen.

4. Attorney

Alas, we live in a a litigious society. One way to protect yourself, your real estate portfolio, and any investors you may have, is to purchase each of your properties using a business entity (typically Limited Liability Corporations - LLCs). An attorney can help you set up the business entities to do this and advise you on the best way to structure these businesses in your unique situation.

If you are buying with other individuals and investing with their money, you will definitely need to work with a securities attorney to make sure you don’t violate any securities laws and structure that deal correctly. Attorneys can also help you draft and/or review contracts/leases.

5. Insurance Agent

You need to make sure your property is well-insured or you could lose your money and your property. Also, in order to get financing from a lender, you will almost certainly need to have property insurance.

If you are syndicating, you should also have Director’s and Officer’s (D&O) Insurance and Errors and Omissions (E&O) Insurance to protect you as well. Remember what I said above about living in a litigious society? Proper insurance will help protect you.

A good insurance agent will make sure you have the right amount of insurance (not too much and not too little) at the best price.

6. CPA/Accountant

Remember all those tax benefits I talked about in Chapter 2? A CPA will help you make sure your real estate business is set up structurally to take best advantage of them.

Make sure you get a CPA/Accountant that is knowledgeable about investment property; preferably one that is a real estate investor him or herself.

7. Contractor

Find and partner up with a great contractor before you buy. They can help you assess properties to determine how much work will be needed and how much that work will cost. No one can see through walls (there are often surprises), but an experienced contractor will be able to spot signs of bigger issues. You can use these bigger issues to either negotiate the price down or you may decide to walk away.

If you don’t plan to do any work upon purchasing the property (and even if you do), also hire a Home Inspector/Property Inspector to make sure you spot any potential issues.

Lastly, if you plan to buy a property that needs some fixing up (something I recommend doing in order to get the best bang for your buck), your contractor can let you know how much your planned improvements will cost so you can make sure you get the financing you need.

8. Self-Directed IRA Provider

A SDIRA is an individual retirement account that gives you complete control over your investment choices.

Most people have IRAs or 401k’s in plans offered through their employers or through one of the bigger financial institutions – Fidelity, Ameritrade, Charles Schwab, etc. In these accounts, there is a limited set of options of what you can invest in – generally a very limited menu of mutual funds and bonds.

Using a Self-Directed IRA provider, you can convert these accounts into an SDIRA that will enable you to invest in real estate (and pretty much anything else in which you might want to invest).

A SD-retirement funds provider will help you convert your funds, so they are available for your use. 

9. Co-Sponsors/Co-Investors

If you plan to purchase a property with other people, using your knowledge of OPM and OPT to get your start in the game, then you will need to find some investing partners.

When you are looking for a partner, you should be looking for someone with complimentary skills and resources to those that you already have. You want someone who is like-minded to you, but you don’t want someone just like you. You are building a team, not a clone army!

10. Mentors

Last, but certainly not least, you need at least one mentor on your team. A good mentor will help:

• - Motivate you
• - Coach you
• - Inspire you
• - Teach you
• - Guide you
• - Provide a vision for you
• - Lead by example
  

A mentor should be someone who is actually investing in real estate and who is, in some capacity, already operating in a position in which you also want to be. For example, they may have a thriving business, an incredible attitude, or great creativity in real estate. Whatever you hope to model from them, make sure they have managed to achieve that themselves.