No Investor Is An Island: The Team You Need

It's easy to think of yourself as an army of one, but the more successful you are at investing, the more variables you've got to keep track of. The judicious use of experts to provide advice and support can save you dozens of headaches and missteps that would otherwise cost both time and money. Here's a run-down of the players you want on your team, and how they benefit your business.

1. Realtor

When it comes to investing outside your home market, realtors are the boots-on-the-ground support you need. Believe it or not, realtors may find you a pleasant change from first-time homebuyers, who tend to need more hand-holding throughout the process. You know precisely what you're looking for and can present a clear summary of the numbers you've settled on for offers and sales.

A realtor can tour potential investments for you, and give you their perspective on the value of the property. They can also use skype or facetime so you can see for yourself. Using a realtor when you're a buyer just makes good sense, as it's generally the seller who pays commission. And an ongoing relationship benefits both of you. After all, any realtor worth his or her salt is incentivized to tip you off about investment properties before they even hit the listings.

The main thing you'll want to watch for when choosing a realtor is experience working with investors. Ask for references, and follow up. The offers you make on investment properties will be very different from the average home buyers, so make sure you're dealing with someone who isn't scared to make lowball offers and can turn them around quickly without adding to your stress.

2. Lawyer

Where do we even begin? When it comes to real estate investment, a lawyer is your best friend. Whether you have a day job or just a very active portfolio, as a successful real estate investor, you have multiple irons in the fire. There are a myriad of legal entanglements that come up in real estate investing, but too many investors wait to retain a lawyer until they need to go to court. Real estate lawyers can go a long way toward preventing lawsuits and general hassles.

For one thing, just because a property appears to suit your needs doesn't mean local laws and ordinances will allow you to do what you want with it. It's vital to do your homework ahead of time. There could also be tax liens or title issues that a skilled lawyer can turn up before you make a costly mistake.

Good real estate lawyers can also save you money by tracking down tax credits associated with development, which can even help you refine your development plan. And while single-family home contracts can be straightforward, the more complex the investment, the more complex the contract. You need an iron-clad document that has escape clauses in place in the event that an inspection goes south or the seller creates an issue.

3. Lender

One problem real estate lenders sometimes run into is the drastic increase in mortgage regulation over the past decade. The Dodd-Frank Act has created enough red tape for lenders that many small banks have cut back on mortgages. They simply don't have the staff to handle more. This puts investors, who often turn loans around quickly, at a distinct disadvantage. A lender who will work with you, whether it's a traditional institution or a private money lender, is worth its weight in gold.

Realtors and lawyers are the teammates that help you find and purchase your property. Now let's take a look at the players who whip it into shape. There are several primary professionals you'll want to consider, and we've grouped them here from least to most specialized.

4. Contractor

For general renovations, updating and upgrading, you need a trusted contractor-- preferably one person to coordinate any subcontractors you may need, so that you can stay up-to-date on works in progress through one person, instead of half a dozen. A general contractor often has pre-existing relationships with subcontractors and may be able to negotiate a 10-25% discount on the work compared to the quote you'd get. So, don't assume hiring a GC will add to your cost. He may very well pay for himself!

The step-by-step nature of renovation is another good reason to keep a GC in your arsenal. After all, if your electrician drags his feet, it creates a domino effect and the drywalling/painting is delayed. A General Contractor who's on site can keep the work rolling, and can also make sure you don't accidentally pay out for work that isn't done right (or at all).

5. Engineer/Architect

Any time you choose to make layout changes that might involve load-bearing walls, you need an engineer. And some states have laws that favor engineers when it comes to the inspection process. For example, in New York, only an engineer is qualified to assess structural soundness of a building or weigh in on whether your investment has appropriate electrical or HVAC systems.

If, on the other hand, you're planning to drastically reconfigure some or all of a building, including building an addition or adding a floor, you've upgraded to architect territory. If your investment property is in a historical neighborhood or an area with an HOA, an architect may be required in order to maintain local property values and aesthetic continuity. The good news is that they'll also do most of the paperwork involved in permits.

If you retain an architect, don't neglect to ask about energy efficiencies that can be incorporated into any planned changes. This could result in significant savings in the day-to-day running of the property and could qualify you for tax credits or grants, as well. To ensure you hire a qualified professional, investigate the American Institute of Architects' online database and search tools.

6. Accountant

If you're investing, paying property tax and drawing income in multiple states, your taxes can get complicated fast. For example, which structure will best minimize your risk, an LLC, or a corporation? If you're incorporated, do you know how to file the appropriate payroll and complete any other requirements to maintain your status?

There's also the issue of whether you're taking all the deductions and tax credits available to you, including possible renovation, "New Market", and low-income housing credits. An accountant can significantly reduce your tax burden.

And then there's that dreaded word: audit. An audit could come at you from any state in which you're required to file income or transfer tax and tie you in knots for months. No one needs that kind of a headache. When it comes to protecting your assets, an accountant is your best friend.

Now that we've discussed all these potential team members, let's address the elephant in the room: cost-benefit analysis. Many of these team members are the "ounce of prevention" that equals a "pound of cure". That can be difficult to quantify.

To simplify your decision, ask yourself this question: How much is my time worth?

If you're currently chasing leads, preparing your own taxes, doing all the legal legwork, and overseeing subcontractors, how many hours are you spending on these tasks? If you had people doing some or all of those tasks for you, what would you do with those hours instead? How many more properties could you manage, and what would your average return be on those properties?

Are you shocked to realize how many hours you've been spending "under the hood"? Let it sink in for a minute. Could your can-do attitude and bootstrapping be making you less agile as an investor? It's entirely possible. There's nothing lazy about investing in trusted advisors who will free you up to focus on the big picture.