One of the most powerful tools in real estate investing is leverage. In the post “4 ‘No Money’ Ways to Invest In Real Estate”, I describe how to use leverage to put a down payment on an investment property. Aside from financial use, you can also leverage people’s skills.
We couldn’t have reached the level of success in real estate investing without our team. When we first started, we started reading various books to self-educate ourselves.
However, their expertise and experience is something that could never achieve on my own in a short amount of time.
Though you may have not found your first investment property, you can start building your team in the meantime. Here are the 8 important people you need for your core real estate team.
If you’re married, the first person you need to include in your team is your spouse. Real estate investing requires a lot of capital, time, and mental strength.
If you and your spouse are NOT on the same page, especially financially, then I would advise against pursuing investing.
You will go through waves of stress and frustration. You will need a supportive spouse to help you overcome those overwhelming moments. Check out my post “4 Easy Ways To Secure Your Rehab After Hours” to read about a notable overwhelming moment that I experienced.
It was actually Jacqueline who originally suggested we start investing in real estate. Over a decade ago, she told me she wanted to buy a condo in downtown and rent it out.
I was quickly against it ONLY because I didn’t understand real estate. How ironic that years later I proposed we should become investors.
2. Real Estate Agent
A real estate agent can help you find a property that matches your search criteria. They also have access to the Multiple Listing Service (MLS), which is a listing of properties that are for sale.
However, not all real estate agents are the same. There are some agents that only work with residential properties and don’t have any experience with investment properties.
Try to have a real estate agent that is also an investor. They will share the same mindset as you and always be on the lookout for a good deal. Check out the post on how to calculate cash-on-cash return and get a FREE Cash-on-Cash Return Worksheet.
Our agent found us a property that just hit the market. It was in an ideal location near a university and a hospital. There were multiple offers on the property.
Our agent put an escalation clause that allowed us to outbid the highest offer by an extra $500 up to a certain limit. We got the house!
You can technically get a mortgage from any bank. However, the people you speak to at one of the big banks, don’t have that much say in getting you approved for a mortgage.
I recommend working with a local bank and build a relationship with one of their lenders.
We have a fantastic lender and she is actually on the board of this local bank. She says “We don’t invest in the property. We invest in the people.” Check out the post “4 ‘No Money’ Ways to Invest in Real Estate” where our lender put us on the path to be successful investors.
4. Insurance Broker
Instead of getting property insurance directly from one of the big box insurance companies, I recommend finding an insurance broker. They are like a middle-man that will set up a policy with one of the big box companies.
If you ever need to switch companies, your broker will do the work and find you another company that meets your needs.
For example, on one of our properties, the insurance company at that time did not want to continue with us. We filed a claim in our first year with them. So, they loss a lot of money with us before making any profits with us.
Our insurance broker informed us of the situation and already presented us with another company. All we had to do was give her the green light and we were back in business!
If by chance, you will have to evict one of your tenants, it would be beneficial to have a real estate attorney as part of your team. Though you may not need them frequently, it’s good idea to know one just in case.
For us, we also met with an attorney to help us create a Limited Liability Company (LLC) for our properties. You actually don’t have to hire an attorney to file for an LLC.
For us, we just felt more comfortable going through an attorney especially since we wanted the beneficiary to be our family trust.
Having an LLC is not necessary when investing (for now). There are reoccurring fees associated with maintaining the LLC. Each fee various from state to state. One state could $800 a year while another state charges $120 bi-yearly!
Over time, as your debt service goes down and you gain more equity in your property, you should consider hiring an attorney at that time.
6. Certified Public Accountant
A CPA can help maximize your tax deductions. That is one of the benefits of real estate; Expenses are tax deductible, which can lower your taxable income.
However, like real estate agents, not all CPAs are the same. When you are searching for one, ask if they have any investment properties or if they have any clients that are investors.
Also, ask if they are familiar with a 1031 exchange.
A 1031 exchange is a way to temporarily avoid paying taxes on capital gains when you sell an investment property. However, you must purchase another property with a purchase price at least the same price you sold your property.
If a CPA is familiar with a 1031 exchange that is a good indication they have investors that are also clients.
7. General Contractor
A good contractor (GC) is one that can provide accurate estimates and respect your timeline. They would be familiar with the rehab process and can easily answer questions, such as “Does Home Depot or Lowes cut wood for you?” Unfortunately, I have not been able to find a GC that I can fully rely on.
I’ve worked with numerous contractors and they all have their pros and cons. Avoid a GC that require all the money up front.
I pay my contractors in stages each time they complete certain milestones.
Also, if a contractor is not working out, it’s better to cut your losses sooner than later. I’ve had a GC that had trouble managing his schedule. I moved on from him and hired someone else to finish the project.
A mentor is someone who has experience as an investor and someone you can talk to. Don’t expect them to necessarily find you a deal. Instead, seek their help when you need to feel insecure or need some guidance.
I’m reminded constantly by our mentor that real estate is all mental. Their experience in the local market also guides us on where we can invest.
We were fortunate that our core team members are also investors as well.
Our insurance broker is an investor; So, she knows what kind of policy we need.
Our attorney is an investor and the president of the Metropolitan Omaha Property Owners Association.
You can visit your local Real Estate Investors Association (REIA) group to start networking and find your key people. Furthermore, you can always send us a message and we share our experience and thoughts in a future post.