Building the Right Team—Part 2: Implementation
In this three-part series about Building the Right Team, we’ll guide you through a thought process that will help you research, gather and sustain resources that allow you to achieve the most success in your real estate investment efforts. The second part is all about putting your strategy to work and finding the right people and companies to build your team.
Read Building the Right Team—Part 1: Strategy here.
Putting your strategy to work
Now that you have a better idea of your tolerance on the topics an investor needs to address (and others you may have discovered through your self-assessment), you’re ready to organize where you need a team and what you want to take on yourself.
Using the tolerance assessment topics we presented in Part 1: Strategy, you’ll want to find the resources (companies, services, people etc.) you need not only for what you want to do yourself (aka “in-house”) such as sourcing deals for example, but the resources you need for what you don’t want to do yourself (aka “outsource”). For example, these are the typical resources that would take care of the issues related to your investment property and portfolio strategy:
Property Management Company or Individual Property Manager:
Managing tenant issues and late payments
Marketing and leasing your property’s availability to new tenants
Tenant repairs and maintenance to properties such as painting or updating carpeting
General Contractor and/or Construction Company:
Coordinating construction improvements whether substantial or cosmetic to increase value
Major repairs such as a new HVAC system or structural improvements to properties
Mortgage Company or Bank Lender:
Refinancing or leveraging equity to purchase new properties
Securing the right financing
Tax Attorney, CPA or Investment Advisor with Real Estate Experience:
Minimizing tax liability and tax shelters, 1031 exchanges, etc.
Managing cash flow through your portfolio, doing cost analysis on potential properties to add to your portfolio
Real Estate Brokerage with Investment Property Experience:
Finding that first or next property that’s an ideal fit for your portfolio, off-market deals, foreclosures, etc.
Competing with other investors or hedge funds to find properties
Negotiating purchases and getting accurate comps and potential rent you can get for the property
Forcing appreciation and assessing marketability of your property to decide whether to hold or flip
Real Estate Attorney and/or Title Company:
Navigating leases, title insurance, settlement and other legal responsibilities
Finding your team
It can be difficult to find trustworthy resources and professionals to build your team when you’re entering a new market or getting into real estate investing for the first time. It’s not uncommon to get some of these resources through your real estate broker. If your broker has been in the same region for a while and had become well established, they likely have developed a database of vendors, contractors and suppliers who deliver a variety of services to homeowners.
When getting references from your broker, however, make sure they understand the type of investor you are and what you’re looking for. If your broker has been difficult to work with or appears to recommend “friends and family” types of resources, be cautious. If you aren’t having a good experience with your broker, you may not have a good experience with the resources they send your way. (We’ve heard these types of stories from our Empire Property Management clients who had similar experiences before they came to us.)
Here are a few additional ideas to help your search:
Listen to podcasts and visit websites (and YouTube) on real estate investing—You can pick up a lot of good tips on finding resources that you can apply in your area.
Search services online—Googling resources takes more time as you need to make sure you are vetting the resources that come up in your searches. Check the Google Business Reviews and also Yelp! for reviews from customers. Check with your local Better Business Bureau (BBB) to see if there are any complaints registered with the company owners or their performance.
Join an investment club in your area—Similar to the Empire Investment Club, being part of a network of other investors will help you learn best practices as well as share resource referrals. If another investor has experience with a contractor, property manager or similar business you need expertise from, definitely get a warm referral. With warm referrals, the business will be more apt to talk with you and explore working with you versus if you came at them cold.
Find other investors like yourself—In the absence of an investment club where you can meet other investors, you can seek out investors on social media channels such as viewing and research those who are commenting on investment-related posts or videos. Just like building your team, you can also build an investor peer network where you can all learn from and help one another.
Ask friends, relatives or trusted neighbors—You’d be surprised how many good resources you can get from your inner circle of family and friends.
Securing Your Team
As you begin putting together your team, ask everyone you are referred to for additional referrals and resources to help you round out your team.
The next steps are about securing your team. Once you’ve put together a good team, it’s time to incorporate them into your business, meaning, you want them to know that you’ll be an ongoing source of revenue and referrals if they take good care of you. Some things you can do include:
Look at possibly putting a maintenance person(s) on retainer
Set up annual contracts with property managers, yard maintenance companies, etc.
Have the resource take care of multiple properties if you have more than one property in the same market
Agree to mutually beneficial payment terms
Refer them to fellow investors you know in the area
In the end you want to rely on your resources and have a good business relationship with them. When a company knows you are serious about making real estate investing a long-term endeavor they are more apt to sustain their relationship with you over the long term. A big part of building the right team is how you and your resources get to know each other over time.
In the final part of this 3-part series, we’ll talk about maintaining these relationships and dealing with the ups and downs of adding and rolling off properties from your portfolio and how that impacts your team.