Real estate investment is typically viewed as a solo career. You don’t have a boss, and you don’t really have employees on the payroll. Nevertheless, investors recruit all the time.
Investors are constantly working with a team of real estate agents, inspectors, handymen, contractors, and the list goes on and on. If any of the members of your team messes up, you stand to lose a lot of money.
For example, an investor I know used the seller’s agent as his own real estate agent. The agent prevented the discovery of black mold in a bedroom by claiming the current owner had a tenant inside who works late nights and slept during the day.
Thus, the investor did not realize until it was too late to back out of the deal. He spent thousands to tear down the walls in the unit and clean the air ducts.
The inspector should have caught the mold; however, in that same example, the inspector didn’t play his role on the team diligently. The inspector was recommended by the real estate agent. They had a working relationship.
So, when the agent told the inspector the same story about the tenant and said, “Don’t worry, it’s the same as the other bedrooms,” the inspector trusted the agent and signed off on the property. While the real estate agent was deceptive and greedy, the inspector was trusting and negligent.
This same investor then hired a handyman to fix the property. My friend was diligent this time. Instead of going off of recommendations, he interviewed dozens of contractors for the job, but many couldn’t start for weeks and others were too expensive.
He didn’t want to spend a lot of money on repairs given the time and rental income he was already losing. He finally settled on an inexpensive handyman who said he could start that weekend and finish by the end of the month.
It didn’t take a month. It took three months, during which the investor had to pay HOA fees, taxes, and the handyman while making no profit on the property.
It was a nightmare. Now, you might assume this investor was a novice, but he was not. He had 15 years of experience at the time, but he was investing in a new market.
I chose this particular example to illustrate that investors need to build multiple teams. If you’re anything like me, you don’t put all your eggs in one basket—or more clearly, all your profit potential in one property or market.
You may choose to invest in multiple markets to protect yourself from the potential collapse of one. In new cities, you have no network of connections. This was the case for the investor in the above examples.
You might get multiple rental units ready at once or flip a home while prepping a rental. Both require two teams.
Needless to say, a real estate investor must know how to build trustworthy and efficient teams in new areas, oftentimes rather quickly.
After recruiting teams in many different states, these are the tips I have to offer for each team member.
Related: The Core 4 Members Vital to a Profitable Long-Distance Real Estate Investing Team
Your inspector isn’t the first person you need, but they are the first person you should find. That way, you have time to pick someone who is qualified rather than operating on a time crunch.
Look for someone with some kind of credential, preferably from a state licensing agency. Check their record for complaints. If your state doesn’t license inspectors, look for members of the American Society of Home Inspectors, who must have completed 250 home inspections amongst other credentials for membership.
Licensed inspectors usually aren’t the cheapest, but this is not the area to cut corners. Your inspector is responsible for catching any defects to the property that you wouldn’t notice.
The most important thing is to make sure that this inspector is not affiliated with your real estate agent or their brokerage. It’s easy to take the agent’s recommendation, but many inspectors form these relationships with agents to get a lot of work. That makes it difficult to distinguish if the inspector is showing bias.
Look for an inspector with errors and omissions insurance. This type of insurance will cover damages to the apartment that the inspector missed should you choose to sue.
Check out the inspector’s website and reviews on Google and Yelp. Always search for the inspector on Google and Facebook, where people are likely to post their opinions of work.
Lastly, you want to know what your inspector will inspect, their background, and whether you can come to the inspection—even if you have no intention of actually going. An inspector who doesn’t want you present might not do the job thoroughly or diligently.
Real Estate Agent
You always want to bring your own agent to the deal. Do not simply work with the buyer’s agent. It’s not the simplest option, but the more eyes you have on a deal, the better.
It doesn’t matter if you have two months’ or two decades’ worth of experience in real estate. It’s always possible to miss something, and everyone you involve brings a new set of experience to the deal.
Get an agent from a different brokerage too, especially if you’re in a new area. In new cities, you’re already at a disadvantage for knowledge. You don’t want to work with a pair of agents that already has a working relationship that you are left out of.
Additionally, you do not want to hire the agent with the greatest amount of monthly sales. You want the agent with the greatest quantity of satisfied clients.
Your handymen are likely the most important members of your team because they can help you for the long-term.
Not only will they help you with the initial work, but they’re also the ones to call when a tenant has an urgent repair. You want them to clean up after themselves, do long-lasting work without cutting corners, and work efficiently for an inexpensive price.
Unfortunately, the handymen and contractors with the best advertising are likely the most expensive. Having the most expensive prices also doesn’t guarantee the highest quality output.
Additionally, the handyman you find will likely open a network of recommendations for plumbers, electricians, etc. that you can use for your projects as well.
Investors pay handymen the most frequently. It’s important to never create a bad relationship with a handyman because you may use them for smaller tasks in the future. You may not have liked the way they painted, but they might have done good tile work. Then, you can use them to tile.
I’ve created a book of handymen. I write what I liked and disliked about each person I’ve hired inside the book. That way, I know who to call for what job. That book is invaluable to me in areas I’ve done a lot of work in, but it doesn’t help in new areas.
In new areas, you can never know for a fact which handyman will do things the exact way you want them to. The best you can do is make very educated guesses.
Related: 7 Small Things You Can Do to Boost Team Strength
Check Google suggestions, Angie’s List, and HomeAdvisor to make a list of all the contractors in your area that you’re interested in. Read their reviews on those websites and Facebook to figure out your top choices.
Hopefully, they’ll have work examples posted for you to look through. Then, meet them at your property, walk them through the work, and listen to how they would go about fixing it and how long they plan to take.
If their statements align with your preferences, ask them for an estimate. Then, you can compare the best options.
Don’t fear meeting with a lot of handymen. As I stated, handymen are your biggest team investments; therefore, the more time you put in, the less trial, error, time, and money you will waste.
Create your own book of handymen based on the information you collect. Your second choice today might be your top option for the next job.
How to Pick the Best Team
Use the strategy I use for handymen for your entire team. You might end up with a specific person for every type of task (a tiler, a painter, a cleaner, etc.).
Apply it to real estate agents and inspectors, too. In the future, you may have the opportunity to work with one of them again. You’ll want to remember what went wrong and what went right when you’re making the decision.
Any tips you’d add?