701: The Importance of Having the Right Team and Partners
Get the guidance you need now.
For more information about how Jennifer can help you plan, develop and manage a strong real estate investment portfolio, book a complimentary consultation.
Welcome to Episode One of Season Seven of the Growing Empires Show. Our theme for this season is Building the Dream Team. And today we're going to talk about the importance of finding and building the right team. So stay tuned.
00:15
Welcome to Growing Empires hosted by real estate entrepreneur and trusted investment advisor, Jennifer de Jesus. Growing Empires provides insight to building wealth through passive income producing real estate investments for those who want to build and manage a more profitable real estate portfolio.
00:35
Building the Dream Team, that is our theme, and that is what we're going to talk about all of Season Seven. And by the end of season seven, I feel very confident that you will have all the tools that you need to make sure that you are set up with the right partners and the right team. So let me first break down the difference between a team and a partner. When I'm referring to business partners, I'm talking to people that you invest together with. Your business partner is somebody that is going to share the expenses of the properties; they are going to share the profit of the properties, but a business partner is somebody that you are actually investing with. Your dream team, however, are not necessarily people that you invest with. They're people that you trust to help you be super successful in your investing goals. Your team will consist of people like an attorney, your business account, and your property management company, the vendors that you deal with to get work done on the properties that you invest in, your banker, your title, agent — these are the people that are your dream team. And you do want to make sure that you set out to find the right team before you start investing. Probably one of the worst mistakes I see people make is they decided they're going to invest, they invest first, they buy the property. And then as soon as the property closes, they go, ‘Oh, no, I don't have the right team, what do I do next?’ And the time that it takes to build the right team could be weeks, months, years to find the right team. And it all depends on how you go about finding the right team. You may ask for referrals from people that you know or trust, you may already have started networking and have a good understanding of the people that you might want to do business with. However, those conversations should not be done quickly. They are things that happen over time. And there are things that need to be very specific to make sure that you're finding the right team. When we're talking about business partners. On the other hand, we're talking about people that you will likely invest with. And you want to make sure that your goals are very similar. And your outlook on life is very similar. So what do I mean by that? Well, let's just say that I decide that I want to invest with a business partner, a friend of mine, because I want to be able to buy more than I'm maybe capable of buying on my own. So I have a partner, because they have money. And they are going to invest capital in the deal that is going to help us spread out our opportunities for purchases. Now let's say that that partner is looking for a quick return on their investment that may or may not be the right type of deal structure for you. What are you going to add to the deal? What are you going to add to that partnership? For any partnership to sustain growth and to sustain tenure, a couple of things have to happen: One is you have to bring similar benefits to the partnership. So I hear people tell me sometimes ‘Well, he's the brains behind the numbers, and I'm the one with the money.’ That's great, except if you're the one with the money, you're the one that has the most risk. Having the brains and knowing the numbers doesn't bring risk to the deal. Having the money brings the risk to the deal. So is that the best partnership for you? I don't know that it is. The best partnerships are successful because everybody brings in equal share. In other words, everybody invests an equal percentage of money. If somebody is bringing a lot more money to the deal, things are not equal, they're taking a lot more risk by bringing extra money to the deal. In a great partnership, everybody brings something similar. If we're talking about cash, all partners really should be bringing the same amount of cash to the deal, because it never fails that somebody is going to feel like they have done more invested more and their profits should be worth more, or their shares should be worth more, if that's not the case. And then besides the obvious money, a great partnership is built around people that share a similar place in life; meaning that maybe they are in the same place where their kids are about ready to go to college, maybe they've got a similar outlook on their tenure at work, their plans to hold the properties is similar. But as an example, somebody is looking to put in money and cash out quickly is not the same type of investor as somebody that wants to put in money and hold it there and let it build up wealth. So if your partnership looks like that, I would highly advise that you don't start that partnership; you have to have a similar outlook on life, otherwise, somebody is going to want to get out. And that makes things very, very complicated. You have to have a similar perspective on the cost of money, and what makes good decisions. I find that a lot of times in partnership arrangements where everybody is heavily involved in the deal, meaning that they haven't identified one managing partner per se, that when it comes time to make decisions on improvements to properties, a lot of times this is where partnerships go wrong. One person has one idea of what improved should be and another partner has something else as an idea of what improved should be. And if that's the case, your partnership is likely going to struggle. So you want to make sure that you invest similar amounts of cash, you want to make sure that you invest in a similar manner. In a sense that your whole strategy should be very, very similar. And maybe you should even be in similar places in life, knowing when the exit strategy is going to be. And then as you get a little bit more in depth, you want to make sure that you have similar viewpoints on what makes a good investment, when to buy, when to sell, and specifically what improvements to make. And if you're able to do that, I think that you will have a partnership that is going to be very successful, everybody should bring something to a partnership that is a little unique to the partnership. So if somebody knows numbers really good, then somebody should be really good at sourcing deals. And if there's somebody that's really good at sourcing deals, then maybe they have somebody that is really good at leveraging their expertise in the construction world, or repairs and maintenance of a property. Those are the types of things that would make great partnerships. So if you do decide to venture out into that partnership arrangement, I hope that you take the time to really make sure that your partnership is going to be in line and all things that will be relative to that partnership, so that you can be successful.
07:27
The episode will continue in just a moment. Building your dream team must start with trust, which is the cornerstone of our approach and what allows us to deliver the results that we do. You need to trust your team so they're empowered to bring their best and deliver the results you need to be successful. Your team is your true partner in your growth strategy and trusting their contributions and capabilities is what will free you up to focus on sustaining your growth. Whether you're an active investor or a passive investor, your dream team should be compromised of not just experience and capabilities but people with heart you can trust as true partners. Wrong choices will cost you lost time, money and most importantly, opportunities to capitalize and grow. I want to share my experiences with you and help you sidestep those risks when building your dream team. Let's get on a call and talk about your dream team so we can get you set up for success. Book a call with me today at growingempires.com, and I will help you clarify what you need to build the perfect team for you.
08:25
Let's jump over to our other topic. And that's the importance of finding the right team. This season, we are going to talk about everything from what makes a great property manager to finding the agent who finds the deal, how to build a network of business partners, if that's the route that you choose to go down. We're going to talk about building out that vendor pool of people that can actually do the work on the properties. And then we're going to also talk about building out the structure for your legal advice, your accounting advice, and everything else that you need to be successful in your investment goals and dreams. Why do you need the right team? And more importantly, why do you need the right team before you start purchasing properties? I think the quickest answer is simply that time is money. From the day that you purchase the property, everything every day that goes by starts to cost you money. So if you do not have the right team in place, prior to you purchasing the property, you're already losing money. And that's never a good way to start out. So you want to make sure that you have the right team in place. Who do you need for the right team? You need 100% an attorney that you trust. You may not use them for every deal and that's fine. And I'm certainly not suggesting that you need to put an attorney on retainer. Part of the need for an attorney is for legal advice. Do you set up an LLC? Do you not set up an LLC? Does it make sense for you right now in your stage of life and financial growth? If you're going to set up LLC, I highly suggest that you use an attorney to do that. Yes, you certainly can do it on, you know, Legal Zoom or something like that. But if you don't have an idea of what those legal documents should entail, don't do it yourself. You're really just asking for trouble. So you do need an attorney to give you advice on whether or not LLC setup makes sense, the deal that you may be buying could be complicated, maybe not every deal is, but another deal could be and you want to be able to be sure that you have somebody to lean on, should that be the case. And the next person that you're going to need to make sure is on your team is your accountant. If you are still doing TurboTax, for your tax time preparation, you are not ready to invest. I assure you, you're not. You need to have a professional that is going to help you identify what deductions you can take, and really understands the benefits that are out there for investors. Every year the laws change. I constantly talk to my accountant, and he tells me all the time, you wouldn't believe the amount of changes that were just made with this new administration. And that new administration brought on a world of change, that even the accountants themselves feel stressed about reading and knowing for the benefit of their clients. So that's what happens behind the scene from the accountant’s perspective. As an investor, you shouldn't think that you've know enough to do your own taxes or prepare your own returns — you're either going to make a mistake and get audited — and that could be a disaster — or you're not going to depreciate and analyze your profitability in the correct manner to make the most sense. And Either way, it's going to result in dollars lost a lot of times people think of their team as cost factors. And I'm going to tell you right now that if your mindset is Oh, well, attorney is going to be too expensive, and my accounts too expensive. And I don't really want to pay for a great property manager, you probably shouldn't even start out investing your mindsets, not right. your mindset is simply just not right. These team members that I'm referring to, if they are the right team members, they are worth their weight in gold and what they will do for you. And I assure you they will, they will help you make far more money than the cost of their services. You don't ever question paying your doctor when you need medical attention. So I find it shocking when people question the cost of their attorney or the cost of their account and or even the cost of their property manager. It's craziness! You actually have to have the right team for you to be successful and grow, you have to have the right team, I will tell you with absolute certainty that the most successful people in real estate investing, have teams of people and partners around them. It's not one person. Bill Gates didn't get rich and build his empire by himself. Walt Disney did not grow his empire by himself. You need to have the right team and those partners and that team should always be there to support your dreams. They should be there to add value to that partnership or to that team. And if you can find the team that can do that, you will be very successful. If you look at your team, and you think, ‘they're going to cost me too much money’, you're not ready to invest. So make sure you start thinking about before you invest, where you're going to find this network of people. If you do not have this network of people, you want to start talking to people you want to start networking. You want to start asking people. You know, I always go back to something my mom taught me a long time ago, probably as a child, and it still sits with me today. She says, ‘Jennifer, you want to surround yourself with people that are smarter than you at all times. You want to surround yourself with people that are in a place that you wish to get to end life at all times. And if you do that you will get to your destination, you will achieve the things in life that you choose to achieve. If you surround yourself with people that are smarter than you and that are in a place that you wish to be in, if you surround yourself with people or even listen to people that are not where you are, you are making a mistake. Everybody has an opinion. But in my opinion, their opinion does not count unless they are better than you in that specific area.’ So that was Episode One. Next week, we're going to talk about what makes a great property manager. I hope you stay tuned. Until next time, take care.
14:38
For more information about how Jennifer can help you plan, develop and manage a strong real estate investment portfolio visit growingempires.com