April 13, 2020

By Thomas O'Shaughnessy 

One of the most appealing aspects of being a real estate investor is that it's just you and your money out there on the open market, with only your instincts and judgment to guide you. It's a classic American image, and there's a lot of truth to it. 

However, no investor reaches their goals without the help and support of a lot of people along the way. Having a circle of trusted team members can not only boost your bottom line, but it can also boost your confidence and accelerate your timeline. So, who exactly should you get on your side? Read on for a guide to building an elite investing team.

Mentor

So many investors waste time reinventing the wheel when they could've learned those basics from a good mentor. Partner with someone who is where you want to be in five years and pick their brain.

Ask Them:

• How they got started

• Their most memorable wins 

• Worst losses

• Their long-term plans. 

You'd be surprised how forthcoming a lot of experts are. Just don't try to recreate their path to success; if there's one thing you'll discover by talking to successful people is that there's no blueprint for making it. Learn from their experiences, absorb their wisdom, but forge your path.

Scout

Also known as "bird dogs," a good scout can identify undervalued or under-marketed properties and deliver them to you for a finder's fee. They'll understand that sellers trying to go FSBO, foreclosures, fixer-uppers, and other opportunities make excellent deals that cash flow well.  

Scouts are well-connected hustlers who cover a ton of ground. They can find deals that more conventional investors would overlook. Many times, scouting is essentially an apprenticeship, where they learn how to spot quality properties and get a sense of the basics of deal-making from working with investors.

CPA

A good Certified Public Accountant (CPA) won't just help you prepare and file your tax returns. They'll shape your investment strategy with long-term tax planning advice. You should try to work with a CPA who specializes in real estate investment; ideally, they'd be an investor themselves. 

A good CPA doesn't come cheap— you can expect to pay $100 to $300 per hour for a good one, but they're worth every penny.

Attorney

Especially when you're starting, you'll need a good attorney to guide you through closing, confirm all the documentation is in order, and help you draw up contracts. And as you establish yourself as a landlord, you may be the target of litigation. A good lawyer is also indispensable when it comes to evictions, as laws vary widely between cities. 

You can expect to pay at least $200 an hour for a good lawyer, but as with your CPA, it's worth every penny.

Lender

Unless you're buying properties in cash, you're going to need a lender. Having a solid relationship with a lender means you can quickly run the numbers of potential deals without having to run the money down first. And no matter how many properties you buy, shepherding a loan application through the approval process is a long, potentially bumpy ride. 

If you can find a loan officer who's willing to help you through obstacles and get over the finish line, your acquisition process will be a whole lot smoother.

Insurance Agent / Broker

Ask any experienced real estate investor, and they'll tell you that you can chase the lowest possible insurance rate for every policy, but that it's not worth the trouble. Keeping track of several different policies for all your properties can be a logistical nightmare. By using one insurance broker for all your policies means you have one centralized person overseeing all your policies, and tracking all your documents. 

And using a broker instead of an agent means they can shop around for the lowest rate for you, without being tied to one specific office or company.

Real Estate Agent

An excellent real estate agent is an investor's best friend. They know exactly which way the market is going, they know what buyers, sellers, and renters want, and they have a robust professional network. Forging a partnership with a great agent will get you the inside track on hot off-market properties and ensure that you get the best possible price on the properties you target.

So how do you find a great agent? Like a couple of the other entries on this list, referrals are your best bet. Tap into your network and ask other investors. The best part? When you're buying, using a real estate agent doesn't cost you a cent— traditionally, it's the seller who pays the commission.

Once you begin selling properties, you could choose to go FSBO and sell your home via the flat fee MLS, or even become a real estate agent yourself. However, you'll be taking on extra responsibility – so be prepared to put in the hours on finding and brokering excellent deals. 

*Hint: Some agents are willing to work for a flat fee or reduced commission, so always talk with your agent about their fees once you start selling. If you're buying and selling enough property, they'll probably be willing to take a cut for the repeat business. 

General Contractor

If you're flipping houses, your contractor is probably the single, most significant factor that will lead to either success or failure. If they can do high-quality work on schedule and under budget, you're going to make a lot of money. If they can't, you're going to have problems.

But it's challenging to find a good contractor, and not just because everyone else is looking for one too. Ask ten different contractors for an estimate on a renovation job, and you'll get ten different estimates across a surprisingly wide spectrum. You have to find one who's honest, consistent, and dependable. 

One way to find a good one is to use your network. Ask other investors or house flippers for recommendations; if they've been in the game for a while, they'll know who's good, and from who to steer clear.

Property Manager

Between marketing and advertising, filling vacant units, screening tenants, and looking after maintenance, managing even a single property is a full-time job. Now imagine that you own three, four, five, or more properties. Sooner or later, every investor needs a professional property manager to manage the day-to-day operation of their properties.

The average rate for professional property management is 10% of the rents collected. However, property managers are also paid when they fill a unit, so more turnover equals more money for them. You must find a trustworthy property manager who won't exploit your properties for profit.

Summary

This list covers the basics you need to get started. Once your operation is up and running, you'll probably need to get other team members on board— everyone from hard money lenders to a good pest control service. 

But this team will help you build a solid foundation: 

•   The mentor gives you the knowledge

•   The scout and the real estate agent help you track down properties 

•   The CPA and Attorneys will keep your finances and contracts on the right path

•   The lender gets you the money you need

•   The contractor handles the work

•   The insurance broker and property manager help keep your investment secure

•   The property manager will help you leverage your time

With a foundation like this in place, you'll only be limited by your ambition. 

To see if a property will be a good deal for you, check out Rentometer's tools for property listing and rental amounts in your investment area. 

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