Behind every successful business is a team. No matter how much one person thinks he or she can do on their own to create a business, having a team of specialists behind that business owner is the key to true success.
One person cannot be an expert in every field needed to create a profitable business, so putting together that great team will be vital if you want to create a successful real estate investment business, whether that be flipping houses or investing in long-term rental properties.
How you put together your team will depend largely on where your expertise lies in the real estate field. If you are a licensed real estate agent who wants to become more of an investor, you'll need to find great contractors. One the other hand, if you are a contractor, you'll need help on the real estate purchasing and selling side. Then there are all those other, in-between niches that need to be filled as well.
Let's look at what a successful team would look like and then you can plug yourself into your spot and start thinking about how you can fill in the gaps.
Real Estate Specialists
A primary piece of the puzzle will be having someone who knows the ins and outs of the real estate market. The advantages of having a licensed real estate agent include:
• Ready access to the multiple listing services in your area. This will give you the best chance of having a first shot at low-priced houses when they come on the market.
• Knowledge of the real estate market. A licensed real estate agent will know which neighborhoods are hot, which neighborhoods are up and coming, and just as importantly, which neighborhoods are falling out of favor (i.e., falling prices). The agent will also help you set a final price on your property after you make repairs, or if you are renting will be knowledgeable about rental rates.
• Potential savings on agent fees. If you are not a real estate agent, by working with a regular agent you might find one who will knock off a couple of percentages from their fee if they know they will be getting steady business from you.
Having an honest, reliable general contractor is almost mandatory for a successful real estate investment team. A flipper's worst nightmare is to lose a contractor in the middle of a project or to hire an unreliable contractor who can't meet your strict deadlines.
If you are the contractor, you need good subcontractors that you can count on to meet your tight time schedule and perform quality work.
When evaluating your houses for purchase, having an experienced inspector review the property could be invaluable. These people have years of experience examining each aspect of a home and can ensure you might not be missing some big surprises when you start your construction.
Often a general contractor can perform this service, but an inspector who specializes in this field might be a better choice if you like to sleep well at night.
Oftentimes, a single company will provide these two services. A title company will research your property during the purchase to ensure the seller has a clear title and the ability to pass the property along to you, plus handling all the paperwork of transferring the title as you purchase the home and later sell it.
The escrow service will handle the transfer of money between you and the seller, the seller's potential mortgage holder and insurance company, and then do the same on the other end when you sell the house. They also will hold earnest money that keeps the deal together.
Another important member of a successful team is the lender who will be providing your funding to purchase and renovate the property. Whether you are flipping or holding real estate, you will want to consider what type of financing you need.
Even successful real estate investors depend on financing for many of their transactions. That way, they don't sink too much of their own money into any one project. By taking advantages of private funding, borrowers can stretch their money over several projects instead of just one.
As you start or grow your real estate investment business, whether flipping or holding for rentals, contact us about joining your team as a valuable member who can help you develop a successful business.
Center Street communications are not intended to provide business, legal, tax, investment or insurance advice. No Center Street communication should be construed as a recommendation for any business or investment strategy by Center Street or any third party. You are solely responsible for determining whether any investment, investment strategy, business strategy or related transaction is appropriate for you based on your personal investment objectives, financial circumstances and risk tolerance. You should consult your legal or tax professional regarding your specific situation.