Build Your Team for Real Estate Investing

SMARTER real estate investors know the importance of working with a high-performing team of professionals.

A real estate team is vital to help arrange finance, purchase investment property, rehab it, and manage it if you decide to rent it out. Your team brings crucial skills, expertise and experience, without which you would struggle to be a successful real estate investor.

Of course, building a team of real estate professionals is challenging. It requires time and due diligence to get the right people on your team. And when you get it right, your entire team becomes a lucrative asset. But your team is crucially important from the start. It is the foundation of what it means to be a successful property investor. Because as your real estate business evolves, your team will continue to drive growth and success.

When you start real estate investing, what does it take to build a successful team? Who are the essential team players to help you organize real estate finance, fix up a property and make a profit from your investment? This article explains the type of team you need for investing in real estate and covers the following:

• What is a real estate team?
• Why real estate investing requires a solid team
• Who are the Core Four?
• Building a purchasing team
• Building a team for rehabbing team
• Building a property management team
• How to manage a real estate team

What is a Real Estate Team?

A real estate investing team refers to a group of professionals that assist with the process of buying an investment property, fixing it up, and then selling or managing your future tenants. The team typically consists of an investor-friendly real estate agent, lender, finance and legal experts, contractors, and property managers.

Why Real Estate Investing Requires a Solid Team

Building a strong real estate investing team is crucial for succeeding as an investor. Of course, you may have in-depth knowledge of your target real estate market. But there are many skills and expertise that others have much more experience in. This is where your real estate team is necessary. Individuals use their specific skills and experience to ensure a healthy return on investment.

For example, suppose you find a suitable investment property for sale. Your team can help you make a solid offer, find the best mortgage rates, and arrange real estate financing. You will also require expert contractors to fix up the property.

But there is more. If you have a rental property, a property manager can keep up to date on landlord-tenant laws. They will also care for the regular tasks—rent collection, maintenance, repairs and evictions, if necessary. This saves you valuable time and resources.

Another reason successful real estate investing requires a team is that you can draw on a wealth of knowledge. For example, having professionals evaluate investment opportunities helps minimize risks and allows you to make more informed decisions. Additionally, a trusted team can check on other team members’ work— which is vital for out-of-state real estate investing.

Remember that even the most seasoned real estate investor cannot possess all the skills needed to buy, rehab and manage a rental property themselves. 

Real Estate Team — What is the Core Four?

Your team for real estate investing can consist of many professionals, depending on the type of investments you make. However, every real estate team should consist of four core members. These professionals are vital whether you invest in real estate in your neighborhood or out of state. 

Here are the essential members of your Core Four Real Estate team. 

1. The Deal Finder or Real Estate Agent

Solid real estate investments start with finding the right deal. Therefore, a good real estate agent or wholesaler is vital when looking for an investment property for sale. An experienced, investor-friendly agent will also have a network of referrals, access to the Multiple Listing Service (MLS), excellent negotiation techniques, and local market knowledge.  

2. The Property Manager

A good property manager is a valuable asset to a real estate team. Not only do they collect rent and connect with tenants, but they can help your business grow. Property managers tend to know the local real estate industry exceptionally well. They also often hear about deals before they hit the market. In many cases, a reliable property manager is just as vital as an experienced real estate agent. 

3. The Lender

Getting the right finance and terms is crucial to invest successfully in real estate. Therefore, you should have a good relationship with an investor-friendly lender who understands your professional goals. The lender could be a traditional bank, mortgage broker, hard money lender or private lender. As your real estate portfolio expands, you will need a lender that you’ve built rapport with who will lend again and again. 

4. The Contractor

A skilled, reasonably priced, experienced and trusted contractor or rehabber is a core member of a real estate team. You need someone who can work to a high standard and finish a job on time and within budget. A good contractor can help fix up a property to sell or rent, or be on hand for essential maintenance and repair jobs. 

In most cases, the other members of your core real estate investing team have contractors they can refer. But remember that a good contractor can save you thousands of dollars in rehab costs. 

How to Build a Real Estate Investing Team — Purchasing a Property

A real estate team should consist of four core members working toward common goals—healthy cash flow and return on investment. However, your network of real estate professionals should include more than four team players. These professionals assist in your real estate journey—finding and buying property, fixing it up and then selling or renting. 

Here are some essential real estate professionals when investing in real estate. 

What does a broker do?

Like a licensed real estate agent, a real estate broker can help you buy or sell real estate. They usually oversee the work of a real estate agent, ensuring the transactions are lawful. This includes checking paperwork, overseeing escrow accounts, and helping resolve conflicts. In addition, they can negotiate with sellers and buyers and help you get the best deal. 

Wholesaler

A wholesaler can be a valuable asset because they find undervalued properties needing fixing up. They obtain a contract from a property seller and then sell it to real estate investors. These are often bargain properties with investment potential that never make it to MLS. 

Lender

As part of your Core Four real estate team, lenders are necessary for most real estate investor rookies. It may be straightforward to get your first loan from a traditional lender. However, as your portfolio expands, you probably need a hard money lender, private money lender, or equity partner. 

Attorney

All property investors need an attorney with experience in real estate law. You need legal counsel to ensure paperwork is in order when buying or selling property. However, an attorney is also vital when dealing with evictions, tax liabilities, issues with contractors and tenant leases.

Insurance agent

You must have the right type of property insurance to protect your assets. An insurance agent can arrange insurance for house flipping, short-term rentals, long-term rentals, loss of rent insurance, contents insurance and liability insurance.

Title company

Working with a title company is vital when investing in real estate. The title company or title rep carries out due diligence on the property. They check that the seller is the legal owner and that there are no outstanding liens or claims against the property. 

How to Build a Team to Invest in Real Estate — Rehabbing

Unless you buy turnkey real estate, the chances are you will need to fix up the property. Many startup real estate investors make the mistake of either doing too much rehab or trying to do too much rehabbing themselves. Unfortunately, they either wear themselves out or do subpar work and have to pay for a contractor to fix mistakes. 

Here are some essential members of your real estate team when your focus is on rehabbing. 

General contractor

A general contractor should be part of your Core Four real estate team. They should have good all-around construction experience and know how to organize subcontractors. Ideally, they should be reasonably priced but work to a high standard and stay within budget. 

Unfortunately, finding a good contractor who ticks all the boxes can be challenging. Therefore, ask for referrals and get advice from your real estate agent or local property manager. 

Electrician

A licensed electrician is a must if you are fixing up investment properties to sell or rent. Incorrect wiring is a severe hazard that can cause electrocution or fire. Additionally, short-term or long-term rental market regulations usually require a qualified electrician to check all electrical installations regularly and provide a certificate.  

Plumber

A plumber is a vital member of your real estate team because the HVAC system, hot water supply, and other installations are your responsibility, not the tenants. In addition, a professional plumber is necessary when fixing up an investment property. However, you also need one on call 24/7 to deal with emergencies. 

Real Estate Team for Property Management

Having a successful real estate career requires organizing a team for the long term. Here are some of the vital members to help. 

Property manager

A local property manager is one of your Core Four real estate team members. They can help free up your time, allowing you to focus on developing your business growth plan. At the start, you may decide to care for some aspects of property management yourself. But property management tasks can become time consuming as you scale your portfolio.

Here is a list of tasks a property manager will care for:

• Collect rent payments and follow up on overdue rent
• Property inspections
• Dealing with delinquent tenants
• Screen potential tenants
• Monitor market trends
• Stay up to date on landlord-tenant laws and legislation
• Be on call 24/7 to deal with tenant concerns
• Provide monthly and yearly statements for all profits and expenses on the property

A property management company will charge a percentage of the monthly rental income, typically 8-10 percent or more, depending on the market. Therefore, weighing the pros and cons is a good idea to decide if a dedicated property manager can be an asset to your real estate business.

Bookkeeper

A bookkeeper with knowledge of real estate laws and taxes is vital. Real estate accounting requires keeping documents and paperwork in good order, logging income and expenses, and preparing statements for tax returns and lenders. In addition, a bookkeeper must ensure enough cash flow to pay mortgage fees, insurance premiums and contractors. 

A good bookkeeper can also be a valuable asset regarding your investment strategy. For example, they can prepare information on investment property capitalization rate, cash-on-cash return, and net operating income. These vital metrics can help you plan a robust and lucrative investing strategy. 

House cleaning company for short-term rental properties

Suppose you are thinking about investing in the short-term rental market. In that case, it is worth considering using a house cleaning company. Airbnb-type rentals require cleaning after each visitor; trying to keep on top of cleaning while running a real estate business can be time consuming. 

Using a trusted cleaning company can be useful if you flip real estate or manage long-term rentals. For example, professional cleaners can prepare a property for staging or showing to potential buyers or renters. This can help market your property to attract a better type of buyer or renter. 

Marketing team

When putting together a real estate team, never forget the need for a marketing manager. Marketing professionals know how to generate leads, prepare listings, take high-quality images and stage properties. With the right marketing tools, you can reach a wider audience, giving you more potential to profit from real estate transactions. 

Sometimes, a good real estate agent can do the work of a marketing team. However, in other cases, having one or two marketing professionals makes sense to help take your business to the next level. 

How to Manage a Real Estate Team

Getting a group of real estate professionals together is not the same as building a team. First, the entire real estate team must work toward a common goal. This means each team member has a clearly defined role and a level of responsibility but also knows how to communicate well. 

The first team-building step is to find potential team members. Typically, the best way is to get referrals from friends or trusted investors. Then you must conduct due diligence—interviewing them and getting references from their clients and employers. It’s important not to skip this stage—after all, team members will be responsible for your investments.

The next step in building a dream real estate team is to define your strategy. This will help you know which team members are necessary and focus on a direction. For example, do you plan on flipping real estate? In that case, a good team of contractors is crucial. However, suppose you are thinking about the short-term or long-term rental market. In that case, a property manager may be more important. 

Before hiring your team, you should also think about the following:

• Compensation model: Will you pay team members a salary, or will they work on commission? What about freelancers or individual contractors? Do you know the hourly rate you can pay them and expect high-quality work?
• Communication strategy: Communication is the lifeblood of any successful team. Therefore, decide how team members should communicate and the communication flow in the team. For example, when should they contact you before making minor or major decisions?
• Decide who to hire first: When starting real estate investing, it’s highly unlikely you’ll need to hire an entire team at the beginning. Instead, you may decide to gain experience by doing many tasks yourself. After that, however, you will have to decide how to expand the team to keep the business growing.

Type of personalities: One of the trickiest aspects of real estate team management is personality traits. Team members should have a level of self-motivation and be reliable. However, they should also ‘click’ together and learn the importance of teamwork.

Building a Real Estate Investing Team — In Conclusion

Building a real estate team is not easy, but it is one of the most important tasks in your real estate career. Ensure you have the four core members in your team—a trusted real estate agent, lender, property manager, and contractor. The right real estate team will help you to maximize profits, expand your investment portfolio, and enjoy passive income as a SMARTER real estate investor.