The Real Estate Power Team
Real estate by its nature is a people business. During the course of any given deal, a real estate investor can interact with dozens of various people. In making offers and inspecting properties, a real estate investor can deal with literally hundreds of different people between deals. Without a doubt, real estate is a people business and effectively dealing with people and finding the right people to work with can mean the difference of a lucrative profession or going back to the rat race.
Naturally, as you interact with people, it is important to be professional, prompt, and courteous. As the corresponding article in this newsletter points out, people like to do business with people they like. It is also completely reasonable to expect the same behavior out of the members of your power team that you put together. Finding and assembling your power team becomes one of your top priorities as a real estate investor.
The power team you develop is one of the most important things you will do as a real estate investor, as it is critical to the long-term success and growth of your real estate investment business. Each competent and professional member you add simplifies the real estate equation. That is why it is of utmost importance to not necessarily settle on the first person you come across that fits a role on the team. These may be business relationships that last a lifetime so there is nothing wrong with being a little selective.
Whether you are particular or not, the process of putting together the right power team requires patience as it may take some time to develop. This does not inhibit you from proceeding with your business, just certain transactions will not run as smooth as they would with a fully functioning power team. Simply start putting the team together and delegate the numerous tasks of running your business to the appropriate member.
Below is a brief description of a few of the members of a good power team. Identify the needs of your business and financial situation to determine where you prioritize your time in your search. One note that can be added to each of these is that it is important to find the right candidate for the position.
Appraiser - An experienced appraiser in your market will be in-tune with what lenders' property valuations are at. There are many programs that you can find that can help with comps, but a good appraiser speed tracks this process and has a better feel for the lending environment in conjunction with the homes.
Qualities to look for
Experience in area.
Good standing with regulatory agencies.
Contractors - One of the most practical, essential, and on occasion frustrating members of your power team. Regardless of the area of investing, there will be times you need things worked on, fixed, or repaired. Finding contractors is easy. Finding the right contractors may take some time. Once you find them, treat them well.
Qualities to look for
Licensed and bonded in your state.
Good standing with board that regulates the contractor.
Escrow Company - These companies act as third-party service providers that collect money for you from deals, such as lease/option or seller financing. This is one of the easier members of your team to find. After establishing the legitimacy of the business, the deciding factor on who to choose usually comes down to the fees that they charge.
Qualities to look for
Fees and expenses associated with services
Insurance Agent - A straight-forward member of your team that simply protects you and your assets. The main criteria to look for is a familiarity with the type of assets you need protected. Don't hesitate to get multiple quotes.
Mortgage Broker - In today's lending environment, it would be easy to argue that this is currently the most important member of your team. Knowledge of your particular type of real estate investing is critical so don't be afraid to question the broker thoroughly. If a broker fails to deliver on their first attempt in a timely manner, don't hesitate to look elsewhere.
Qualities to look for
Do you believe their sales pitch?
Do they understand your area of investing?
Private-Money Lenders - It never hurts to have access to these lenders as the quickness in certain situations is worth the tradeoff of a higher interest rate. These loans are typically asset based.
Realtor - The use of Realtors in your power team can appear counter intuitive to some real estate investors. After all, you are attempting to find and receive deals before they even get to the Realtor level. Still, networking with Realtors can provide a large amount of information on your market, access to the MLS to obtain sold comps in area, and to selling prices of homes in your target area. Be upfront with the Realtor and what your intentions are as an investor. Once you find the right Realtor that is willing to provide you information, give him or her any business that would require a Realtor.
Qualities to look for
Knowledge of area.
Willingness to work with you as a real estate investor.
Title Company - Title companies are essential to closing deals and offer a variety of services depending on the company. The company will likely assign you a closer or escrow agent and the skill and experience of this agent in understanding the real estate strategies you are using will likely determine their compatibility with you.
Qualities to look for in agent
Knowledge of real estate methods you are using.
Ability to analyze potential flaws in your deal and propose solutions.
These are just a few of the many members on your potential power team. Other members depending on your circumstances may include property managers, CPAs, attorneys, real estate clubs, coaches, and other people you wish to network with. There is no universally right place to start; your particular situation will determine your needs. Once you do start and find the right people, treat them well. When certain members of your team do an exceptional job, find ways to reward them beyond the normal agreed fees. Excellence can be hard to find in any area and you should never take it for granted.
Real estate investing is indeed a people business. Now go start to find your people.