How to Build a Real Estate Investing “Team” With the Skill Sets You Need

by | BiggerPockets.com

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.

real-estate-networking

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

How I Bought, Rehabbed, Rented, Refinanced, and Repeated for 14 Rental Properties

This is the dream right? Going from zero to 10+ rental properties, providing stable cash flow and long-term wealth for you and your family, and building a scalable business model to boot! Learn how this investor did just that, in this exclusive story featured on BiggerPockets!

Click Here For Your Free eBook

Inspector

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.

Handymen

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.

female-rehabber

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?

Comment below!

About Author

Martin Orefice

Martin Orefice has over 12 years of experience in the real estate industry, specializing in rent to own deals and flipping houses. He created Rent to Own Labs as a hub of information about all things rent to own.

9 Comments

    • Martin Orefice

      Hey Jorge,

      You’re right, you should build up your team before getting started investing in real estate. However, doing your research and putting your team into play are two very different things. You can do all of the research in the world and still end up with a team member who doesn’t do the job the way you like it done. Most of the people reviewing real estate agents, handymen and inspectors online are people moving into residential homes. In their case, the agent/handyman/inspector is the expert, and they typically yield to their expertise. Nevertheless, in our line of work we contract larger scale jobs and know how we want things done. The way these team members perform is variable up until you’ve seen them in action, and that doesn’t happen until after you’ve gotten in. At which point, you may be left to find a new team.

      Additionally, at any given time, I could need multiple contractors, plumbers, etc. In which case, I might need a third or a fourth team. In our line of work, recruiting your team is never over!

    • Martin Orefice

      Hey Eric,

      Best of luck in finding your best team! When you’re new, it’s always great to have a mentor. You might not find that with the investors who are competing against you, but once you find a good team, rely on them! A good contractor has likely worked with multiple real estate investors. He or she can probably offer you some great tips!

  1. John Murray

    The more people involved the less money you make. For me I cut out the contractor/handyman and property manager. I do have a great real estate agent, mortgage broker, USSA insurance, inspector and the biggest resource is the internet. The RE Agent is my negotiator, mortgage broker my finance department, USSA watches my 6 and the inspector is a necessary evil to satisfy the underwriters. Other than that the rest will eat into my profits.

    • Martin Orefice

      Hey John,

      That is a good way to make the most out of each deal. You’re right that the more people you have on your payroll the less money you make. I, also, like how you’re leveraging all of your teammates so that they do you the most amount of good.

      In my personal experience, I often have a lot of projects going at once, and if I stop to do all the work myself, I lose more money than I save. By outsourcing the work, I can use my time and energy on acquiring more properties and, eventually, I earn greater financial returns on my time.

      Additionally, I like to bring in an expert for jobs like plumbing, electrical, pest control or mold removal. I would prefer to get the job done professionally the first time to ensure long-term results. I, also, don’t want to overlook things that someone who spends their life doing the job would have caught.

  2. Cheryl Crockett

    What I have discovered is that the team can evolve and be different for every deal. So, once I think I have my team in place, it can change for any number of reasons.
    I was wisely warned to beware of having an exclusive arrangement with one real estate agent. One even asked me for such an arrangement before we could start working together; this person wouldn’t consider any other arrangement. “NEXT!”
    If an agent works with me on a specific property, OK, but a general, all-encompassing exclusivity for all current and potential future deals is too restrictive to generate profits. I avoid this.

    • Martin Orefice

      Hey Cheryl,

      You’re absolutely right. That sounds incredibly fishy. If a real estate agent wants to be your “exclusive” agent, he or she should make him or herself invaluable to you. That way, you want to use that agent because when you do you receive the best service. If an agent is trying to contractually force you to keep using him or her – especially before you’ve even worked together – it’s because the agent knows you won’t want to use him or her after working together.

Leave A Reply

Pair a profile with your post!

Create a Free Account

Or,


Log In Here