Lesson 5: Finding Your Real Estate Investment Team
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Workshop Scenario
Please think of yourself in the following scenario as you complete this lesson.
You’ve decided to be the youngest Real Estate investor in your community. You realize that if you are successful, you can become wealthy and retire at an early age.
Your goal is to learn as much as possible about real estate and real estate investing now so that you can own seven (7) properties by the time you are 21.
So far you’ve explored what real estate is and strategies for investing early. In this lesson, we introduce you to the different team members you will work with as a real estate investor.
Lesson Objective
Define the key members of an investing team and discuss their importance.
As you read, please consider the following questions:
Why should you build your real estate investing team?
Who are the key members of a real estate investing team?
When should you build your real estate investing team?
What is a Real Estate Investing Team?
A real estate investing team is a collection of professionals with whom to work closely before, during, and after purchasing real estate investments. The real estate investing team helps with sourcing deals, financing, the due diligence process, and helping you manage your real estate investments. As you start to build your real estate portfolio, having an established team can help you save valuable time and money. The key to building a successful team is finding reliable people. Build a solid team of professionals that you can depend on.
Building Your Real Estate Investing Team:
Everyone has different real estate ambitions and goals, but whatever yours are, you stand a greater chance of achieving them with the help of your core team members. You should view your real estate investing team members as business partners who are essential to helping you achieve greater success in your real estate investing career.
The Key Members of a Real Estate Investing Team:
Make sure you find the right team members. The following is a list of key real estate investing team members:
Real Estate Agent
Lenders
Contractors and handymen
Bookkeeper
Accountant
Lawyer
Insurance Agent
Property Manager
Team Member Responsibilities
Real Estate Agent
A real estate agent is a crucial member of your real estate investing team. A great real estate agent will help you find deals, bid on your behalf, understand the real estate marketplace, and transact. Real estate agents can act on behalf of the buyer or seller. Traditionally, real estate agents are paid a commission (around 6%) by the seller of a property. Therefore, if you want to add a real estate agent to your team to help you buy property, it will be free.
Keep in mind not to work with just any real estate agent. Try finding a real estate agent who is investor savvy or has previously worked with other real estate investors. Your real estate agent will have access to the Multiple Listings Service (MLS). This will allow you to access the latest property information when evaluating the local market. One final note to remember when selecting a real estate agent to add to your team – make sure they are responsive, honest, well-connected, and amicable. Get referrals from other real estate investors, local real estate meetups, or forums.
Lenders
Building relationships with conventional and private money lenders is wise for any real estate investor. Lenders can range from small community banks or credit unions to large national banks. Mortgage brokers and mortgage companies are also suitable options. Additional options for financing can be through private or hard money lenders.
Regardless of which path you choose to take if or when you finance your real estate investments, the important takeaway is that building relationships with various lenders is an excellent move for any real estate investor. Start building relationships with these lenders now, so when a great opportunity presents itself, and it will, you’ll be prepared with the appropriate financing.
Private/Hard-money lending, as the name implies, means borrowing money from an individual investor. Real estate investors use private lenders to finance deals that either won’t qualify for a traditional loan or can’t wait the usual 30 days or so that a conventional mortgage loan needs for approval.
A hard-money lender provides short-term loans to individuals purchasing residential or commercial real estate. This financing is also available for land purchases. Investors use hard-money lenders to acquire investment properties relatively quickly. Hard-money lenders are considered private lenders and do not use conventional standards to extend credit to borrowers. A borrower uses a hard-money loan as a temporary, short-term loan solution until he can acquire more conventional financing for the property.
Contractors And Handymen
Adding contractors and handymen to take care of repairs is critical for any real estate investor. To find these individuals you can ask for referrals from other real estate investors or team members, check Craiglist.org, or search AngiesList.com. Make sure you check their references. Ask your contractor’s references if they showed up on time and completed the work they said they would. Did they do a good job? Are they trustworthy? Additionally, keep in mind that the most affordable option may not be the best option. It may take some searching to find the right contractor, so be patient. Remember, you’re building you’re A-team.
Bookkeeper
You may want to hire a bookkeeper to help keep an accurate record of incoming credits and outgoing debits. A bookkeeper can help you track income and expenses, and help prepare your finances for tax season. An accurate account of expenses and income is important, and as you start generating more wealth and have more properties to account for, a great bookkeeper can be handy.
Accountant
Adding a certified public accountant (CPA) to your real estate team is a smart move. A professional accountant can help prepare your personal and business tax returns and can offer you solid advice and tax recommendations. Try to find an accountant who has worked with other real estate professionals or who is real estate savvy. Find this team member as soon as possible because a good CPA can help you choose the best tax-saving strategy for real estate investing.
Lawyer
A lawyer is an essential member of any real estate team. A great lawyer can help draft and execute legally binding leases and other real estate documentation. Try to find a lawyer that understands real estate or has worked with real estate investors in the past. A real estate lawyer can help you select and set up the best legal entity for holding your real estate properties.
Property Manager
A good property manager is an invaluable asset to your real estate investing team. From screening tenants to managing property-related issues, a property manager can help relieve you from some of the most time-consuming and arduous tasks. Do a thorough search to find a great property manager. Remember to check references.
Inspector
Working with a good quality property inspector on your real estate investing team can save you money by helping you foresee problems and issues with a property before you buy it.
The inspector should do a thorough job analyzing a property to find all the issues and alert you of them so you can negotiate further with the seller or avoid buying a problem property altogether.
Appraiser
A good real estate appraiser will come out to a property you are selling and accurately assess its value as well as give you helpful suggestions of what you can do to improve the properties
Title Company Rep / Escrow Officer
If you find yourself buying and selling lots of real estate, you’ll want a good relationship with a title company. The title company will be used to close every transaction, so getting to know their process and working out a system with them can save you time & money.
You can negotiate lower fees if you do high-volume deals with them. They also can work with you to close on properties quickly, putting in rush orders for title work and electronic signing of documents to save time having to come to closing at their office.
Who are the members of a real estate team that can help you with your financial needs? (Check all that apply)
Finding your Real Estate Investment Team at the Right Time
You should begin your real estate investing team as soon as possible. The value of your team multiplies as you build your professional relationship. These individuals are your teammates, and identifying these key individuals early on can help you achieve success faster. Your real estate team can help during the due diligence period before purchasing.
There are many places to find team members, but some great places to get started are by asking other real estate investors. You can find other real estate investors by attending local real estate meetups, real estate forums, and Real Estate groups on Facebook or LinkedIn, or by asking local real estate agents. Real estate investors work closely with the real estate investing team members you are looking to find as well. As you identify real estate investing team members, ask to see if they have real estate investor friends in their network.
“Build a successful Team; You build a successful career.”
In Conclusion:
Growing a sustainable real estate investment business is a great way for you as an investor to grow your personal net worth and create a positive impact on your community. As you flip and acquire more properties, you’ll need to consider growing your team. The real estate professionals listed in this lesson are great connections for you to make and can help achieve your goals and elevate your investment business and future career. Take your time as you grow your business and make sure that you hire people whose values and vision align with what you want to accomplish.
With a strong team in place, your investing business will run smoothly and be as efficient as possible. What more could you possibly want?
Closing Assessment:
Please respond to the lesson email with answers to the following questions, and one of our real estate mentors will respond with feedback.
Why should you build your real estate investing team?
Who are the key members of a real estate investing team?
When should you build your real estate investing team?
Advance your understanding by participating in the 24/7 Discussion Forum:
1. Please answer the following questions in the comment section below and interact with learners from around the world.
Why do you think it’s so important to have a real estate team in order to be successful?
2. Please read and reply to other learners’ answers in the forum by stating if you agree or disagree with their answers and why. Your replies should offer new substantiated ideas or thoughtful questions.
or try a prompt below!
