How to Build Your Buy and Hold Dream Team

by | BiggerPockets.com

Buy and hold real estate is a long game—not that there is anything wrong with a short game strategy like wholesaling or mid-range strategies like fix and flips. These methods have their place in this business, but the strategy that requires long-term planning and builds long-term wealth is buy and hold real estate. To truly play the long game with buy and holds, you need to have a really strong team around you—a dream team.

Related: 7 Small Things You Can Do to Boost Team Strength

How to Build Your Buy and Hold Dream Team

The dream team consists of your money team, acquisitions, and management. Each has their purpose, but I will say that your money team is the first step and the one that I believe people overlook too often. Many investors jump into acquisitions too soon, trying to build their network and pipeline of deals before they are truly qualified to purchase those deals. It’s hard to get your real estate agents and wholesalers to take you seriously if you can’t close the deal—and close quickly with little or no contingencies.

Related: 20 Must-Have Team Members for Real Estate Investing Newbies

In today’s video, I talk about the components of your dream team, how to build them, and how they relate to each other. Be sure to watch the video for the full conversation on the topic, and then leave a comment below so we can discuss.

Who is on your dream team? What player do you have that is invaluable? Which member of your team brought things to a new level?

I can’t wait to hear from you! Be sure to watch the video!

 

About Author

Matt Faircloth

In 2005, Matt founded The DeRosa Group along with his wife, Elizabeth. At the time, the two person company owned and managed two assets – a single family home and a duplex. Over the last nine years, they have grown the company to a 12 person team owning and managing over five million dollars in residential and commercial assets throughout the central NJ and Philadelphia area. One of DeRosa’s mantras is “to make money while making a difference.”

7 Comments

  1. Andrew Severino

    Buy and hold is a GREAT way to build wealth. Magic happens over time due to compound interest, devaluation of currency etc. And having a team in place of experts who are reliable can be the difference between success and failure.

  2. Jerry W.

    Matt,
    I always look forward to reading the posts by you and Liz. This article is excellent. I always appreciate the practical advice that is coming from experience. I am struggling to build a reliable team myself, by can attest how nice your life can become with the right folks working for you. Unfortunately it is hard to retain good help in our area. I am becoming better at this, but have a long ways to go. I especially appreciate your insight that acquisition is only about 10% of your business, property management is really the heart and soul of it. I love the acquisition, but struggle with rehab, repairs and turnovers for new tenants. I actually have 3 properties that are not rented due to rehab not being done, as I am doing it myself mostly. It is killing my cash flow, so I end up spending all my free time working when I should have others doing it. My top contractor is in such demand I am lucky to get him for anything but emergencies. The problem with really good help is everyone wants to hire them away from you. With over 20 rentals locally, and more in the neighboring town, I have to get a good team going.

  3. Cindy Larsen

    Matt,
    Great video, with clear explanation of key concepts, as usual.

    I need a great CPA. How do I go about finding one?

    I have a suggestion/comment on the appliance repair front: First, I’ve researched appliances, in the last few years, and, they are not built for quality or longevity the way they used to be. Imhad amfridgenthat workedmfine for 25 years. Now, you are lucky if it doesnt break in the first two years. These days, regardles of manufacturer, or price point, they are building low quality products (washer/dryer/, fridge, range, dishwasher, microwave, etc), by which I mean, if you pick any manufacturer/model, and research reviews, you will find a small but significant fraction of appliances break during the manufacturer’s warranty period (usually one to two years), and a much larger fraction break within a year of the warranty expriation. Basically, all appliances being built today are crap. And they are NOT inexpensive.

    SO, I’ve implemented the following strategy: I buy all my appliances at Lowes, during their sales, when possible. They will also price match anyone else’s price. GEnerally I don’t shop at Lowes, as they have higher prices than Home Depot with roughly the same quality products. However, Lowes has a feature called mylowes that will keep track of your warranty info online, for each property you own. this is why I buy appliances at lowes, along with their great appliance service management. I buy the extended warranty, which is inexpensive compared to a service call. Then, I have 5 years after buying the appliance where, if it breaks, I call Lowes, and they send a guy, and fix it, or replace it, at no cost to me, and minimal time cost to me. The cost of the extended warranty is not only less than a service call, it is part of the cost of the appliance, on the receipt, and, if the total applicance cost in any one purchase is less than $2,500, that total is depreciable as an expense in the year of purchase. So, I can buy appliances whenever I need to, and get a tax break right away. I can predict capex for appliances assuming a 5 year lifetime, until the extended warranty runs out (if they last longer, that’s great, but I’m not betting on it). This strategy reduces one property management headache, and makes it easier to predict expenses, since you are prepaying for them by purchasing the extended warranty. The total depreciation of the appliance cost in the year of purchase more than covers the cost of the extended warranty. And I don’t have to spend time figuring out which is the appliance manufacturer/model with the best price/performance, longevity and lowest service costs. I can just buy a nice looking/good features appliance that is on sale. if it is a lemon, it’s not my problem, it’s Lowes 🙂

    Looking forward to your advice on how to vet a CPA.

    CJ

  4. Ken Goodman

    Thank you, Matt. Terrific video!

    On the Acquisitions Team, I would like to suggest adding a good title company. I think it’s important to develop a rapport with with title, they are a huge part of the process, especially if you are investing from out of state and are not familiar with the local laws. When we started to invest in the mid-Atlantic region, we made an appointment to meet with a local lender and local title company to get to know them personally. It has made ALL the difference in the world. When they can put a face to the transaction, the rough spots get smoothed over.

  5. Jerome Kaidor

    My largest property is in Fresno, California. One very important vendor is the HVAC guy. Fresno “enjoys” extended triple-digit temps in the summer. We have an excellent HVAC contractor. Once every couple of years, I pay him to do preventive maintenance – his crew climbs the roofs, cleans the condensers, inspects the electrics, the condenser fan motors etc. Good HVAC is vital in the CA central valley!

    We were having a hard time in 2008. The housing bust caused all the house flippers to offer their houses for rent – because they couldn’t sell them. So there was suddenly a glut of SFRs. Most of my section 8-ers left. However, some of them actually came back! Why? Because we have the AC.

    For appliances, we have a long standing relationship with a local used appliance shop. Something breaks, they come out and fix it. If they can’t fix it economically, they install us a new one. Once a month, a pile of little yellow invoices arrives at my house.

    I make every effort to treat my vendors well. I know their receptionists by their first name. I listen to their advice about what needs to be done. I pay them *fast*. No 30-day games. Because my success depends on them.

    Last month was an expensive month. $30K of capex. One elaborate turnover, one crawlspace flood, one average turnover, one tile flooring job. I could have made it through by stretching out my vendors. Instead, I pulled $10K out of a 6% credit line, and paid everybody as fast as usual. I figure that pleasure will cost me $50. Well worth it to keep my vendors happy.

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