Assemble The Right Team Before You Start Investing
By JD Esajian on May 19, 2014
The more an investor can do on their flips by themselves, the more money they will make. This is nice in theory, but in reality it doesn’t work this way. Before you look at a single piece of real estate, you need to surround yourself with an investing team that knows what they are doing. You can follow all of the investment rules and guidelines, but if you don’t have people in place that know what they are doing, you will end up lost.
Having an idea of what kinds of properties you want is nice, but it is up to your realtor to determine if your thoughts are in line with reality. A good realtor will know what you are looking for, in what price range and in what area. If you put all of your cards on the table when you meet, they will want to work just as hard for you on an $80,000 purchase as a $200,000 one. They can see the long term value in working with you and want to establish a relationship, and know how to find you the right deal. You may think you have an “in” to find deals, but in most cases a good realtor will know about that same property a day before you.
After your realtor, the next most important team member is your contractor. Your contractor holds the keep to turning your budget into reality. Just because you want to spend a certain amount on the property doesn’t mean it is realistic. A good contractor will give you solid estimates and do the work when they say they will. You should never have to worry about if they will be there when they say they will and you can trust the quality. This kind of a relationship can take time and a few deals to develop but when and if you do it will be critical to your business.
Closing a deal can be a great feeling, but it is up to your attorney to cross the finish line. Your attorney will protect your interest not only on the contract but throughout the closing process and beyond. Between your attorney and your accountant they can guide you as to the best way to structure your business and what to do with any extra funds. You want to keep as much money as possible per deal and not worry about tax implications at the end of the year. You can make money, but if you are not keeping as much as you should, you are doing more work than you have to.
The ultimate goal for any investor should be to do less work per project and not more. The best investors understand that they are only as good as the team they surround themselves with. Instead of focusing on deals when you are starting out, focus on the team that is around you. It will take a few deals and possibly some turnover on your team, but once you have the right people in place you will enjoy the business more and your bottom line will be rewarded.