Every real estate investor should have a team of individuals to help with their investment strategy. Each member of the team has a unique role which results in each party benefiting from the relationship.
If you are a new investor and do not know the four people you need on your investing team, this blog will be extremely helpful for you.
1. Real Estate Agent
One of the most important people you can have on your real estate investing team is a quality real estate agent. In most cases, a real estate agent serves as the main deal finder for your team.
It is very common for you to work with a real estate agent free of charge because both parties are benefiting. The more deals that you successfully close with a real estate agent will result in the agent wanting to secure more business with you based on their experience.
Having a real estate agent on your investing team is so important because they can help you keep track of the market every single day of the year. For real estate agents, it's their job to be up to date with the newest listings and market changes in the area.
So instead of you having to bear the responsibility of constantly looking for deals and trying to gauge where the market is going, you can have a dedicated individual who is willing to do all of the heavy lifting for you.
However, having a real estate agent isn't the only way to find deals on your investment team. If you, by chance, are a real estate agent yourself, you might look for wholesalers or bird dogs to find off-market deals that you may not know or have access to.
The next critical individual that you need on your real estate investment team is a lender. Unless you have tens of thousands or even hundreds of thousands of dollars easily disposable and willing to use for an all-cash offer on a property, you will need some type of lender to provide financing for a property.
In many cases where individuals have the ability to make an all-cash offer, they still choose to use a lender's money versus tying their capital up in a property. This is a very smart investment strategy because it gives the investor the freedom to invest their capital elsewhere. Therefore regardless of your situation, you should have a lender on your investment team
A part of having a lender on your investment team is developing a relationship with the financial institution or individual so that they want to give you money based on their experiences working with you. Similarly to finding a real estate agent, you want to make sure that the relationship between your and your lender is mutually beneficial.
Suppose you are looking for lower interest rates from a lender. In that case, it is very common that smaller local credit unions provide lower rates versus bigger banks such as Wells Fargo or Bank of America.
Now the type of lender may vary depending on your investment strategy. If you fix and flip properties, then instead of having just a financial institution like a bank to supply a 15-30 year mortgage on a property, you might also have hard lenders to help fund the construction and rehab costs for a property.
Whether you solely invest in fix and flips or are a buy and hold investor, you need a reliable contractor on your team to help fix any issues that may arise with the property.
This might be the toughest of the four individuals to find. The ability to find a quality contractor may take time. It is best practice to get reviews and recommendations from other investors related to the contractors they use, but it can still be difficult to follow.
Finding a good contractor is difficult because they are so busy and maybe working on other projects when you may need them. Therefore it is best to have multiple contractors on your team just if another one cannot help you with the project.
Ultimately you want to find a contractor that has years of experience, is very skilled at their craft, and can be paid a reasonable rate for the work they do. Therefore you need to keep in mind that you and the contractor should be benefiting from your relationship together. You both should be able to work together to maximize profits on a project for each other.
4. Property Manager
The last member of your real estate investment team should be a project manager. I understand that not everyone plans to hire a project manager, but you should truly consider the option when you begin to think about scaling your business.
Hiring a project manager to help take care of the daily tasks, upkeep of a property, and working with tenants to ensure the property is filled year-round can be a very time-consuming job. Therefore finding someone who can do all of those things very well is difficult, so you should ask for recommendations and reviews from other investors.
Not only do project managers help manage a property similar to real estate agents, they always have an eye on the future of a market. Because a project manager typically works with other investors around an entire market, they understand some of the common trends that a particular market may have.
Another important reason why, even if you plan to self-manage your entire portfolio, having a relationship with the project manager can help you better understand the market you are investing in. For example, understanding how much to charge for rent for a particular property in the area. This is the type of data that a property manager will have on hand for many of the properties within the area.
Finding the right members for your team can be difficult, but it should not be a rush process. It should require many hours of research and conversations with other investors in your area before you make a decision on all four of these members.
Real Estate Agent