If you’re a real estate investor who wants to massively increase your chances of turning investing into a successful career, there is going to come a time when you’ll no longer have enough hours in the day to do everything that needs to be done by yourself. As your real estate business grows, you’ll want to build what’s known as a “Power Team”.
A Power Team is a group of professionals that compliment each other without taking business away from the other members of the team. Power Team members often work with the same clients and often provide referrals to other members of the team.
If you want to build wealth and achieve financial freedom through real estate investing, you’ll NEED a Power Team. Below is a list of the kinds of professionals you will want to consider having in your Rolodex.
Who Should Be in Your Power Team
Before you put your team together, remember to do your due diligence. Conduct informal interviews with potential team members and gather references. Ask for recommendations from friends and fellow investors and get a good sense of each team member’s character. This way, you’ll be less likely to be stuck with someone who’s not a good fit for your business.
With that being said, here’s the list of professionals you may want to network with to build your ultimate wholesale real estate power team listed alphabetically.
Accountant/CPA
Maintaining organized financial records plays an important role in running a business. It’s impossible to run a business properly, or even rehab, flip, or rent a single house for that matter, without proper bookkeeping. The tax implications alone require a qualified accountant.
There are many kinds of accountants but not all are qualified to help your situation. You want to hire an accountant who not only has experience with real estate investors but is also actively involved in the industry. You’ll be trusting your accountant to be knowledgeable and current on tax laws and any other tax-related topics that might impact your business. This person will act as a paid advisor so they need to be much more knowledgeable in this area than you are. When interviewing accountants, ask the following questions:
- What is your tax background?
- What kinds of clients do you work with?
- Are you available year-round or only during tax season?
- Do you use tax software? If so, which software?
- What records do you need from me?
- What happens if I get audited?
Since hiring an accountant is the same thing as adding a trusted advisor to your investment team, make sure they have a clear understanding of your goals.
Appraiser
The valuation of a property is hugely important in an untold number of real estate deals. For example. a real estate appraisal is needed whenever a person is financing the purchase of a property or when an owner is looking to refinance. Appraisals are also usually needed during estate sales and divorces, and they can also be used to determine tax liabilities.
Not only will an appraiser give you an accurate assessment of how much a property is worth, but they can also give you advice on the most cost-effective ways to add value to the property.
Given all of that, it would definitely make sense to have the contact information of a few highly professional appraisers you can trust.
Attorneys
The single greatest thing you can do as a real estate investor is to mitigate risk. You’ll want an attorney that is well-versed and experienced in doing real estate deals in compliance with the local laws of your area.
Since there is so much fine-print associated with every deal, attorneys can help you avoid making huge, costly mistakes. For this reason, having a go-to attorney that can help you accomplish your real estate investing goals is priceless.
The needs of real estate investors vary and are different than the typical homebuyer. Laws also vary between states and none of it is exactly easy to navigate. This is why finding an investor-friendly real estate attorney is so crucial to your real estate business.
Also, in general, attorneys are trained in conflict resolution and negotiations. Having an investor-friendly real estate attorney on your side can sometimes be the deciding factor in making a deal worthwhile.
There are three strategies to finding an attorney that I suggest. They involve networking and referrals:
- Ask the local Real Estate Investor Association organizer.
- Ask the local REIA club’s members who have done at least 10 deals or more who they use.
- Ask an investor-friendly Realtor who they use as an attorney.
Contractors
Contractors are absolutely necessary for your REI business. They are going to be one of your go-to sources of information when determining an estimated ARV (After Repair Value) for a property you’ve acquired or are looking to acquire. They’re also going to be the people to actually do the rehab or remodeling work that so many properties desperately need.
There is a lot that goes into finding a great contractor. Like many other professionals on this list, there are a few things to consider:
- Are they licensed and insured?
- Do they have references you trust?
- Regarding their work, are there a lot of serious complaints to be found online?
The best contractor value consists of a combination of quality, speed, and price. When searching for a great contractor, you want to find that balance.
Escrow Officers and Title Companies
Title companies act as a combined agent of the insurance company, the buyer, the seller, and any other parties involved in the real estate transaction. The task of any title company is to ensure that the entire title transaction process goes as smoothly as possible.
Title companies can do quite a bit for your real estate investing business including:
- Perform a title search
- Defend you from claim to ownership and title challenges
- Act as a central clearing house
Your title company may also act as an escrow agent meaning that they will manage the escrow account for the property sale. A title company’s duty in this role is to safeguard money and documents related to the sale and to serve as an impartial party that disburses payment to the right vendors, banks, and other parties (with written permission from the buyer and seller).
In a recent article, we told the story of a very complicated and difficult deal that was brought to us through one of our many contacts. In it, one of the escrow officers ended up being the hero of the story. You can read about that harrowing tale and how the agent saved the day here.
Handymen and Tradesmen
Handymen and tradesmen are great to have in your Rolodex as catch-all problem-solvers for anything that goes wrong with physical properties themselves. Handymen can be anybody, including yourself, who can do general, daily maintenance.
Tradespeople are professionals that are often times licensed. They’re going to be rarer than handymen but they’ll also be easier to find using professional channels like networking events, through referrals, and even through online search tools like Angie’s List and HomeAdvisor
Of course, we’ve all heard horror stories of tradespeople and contractors who provided poor service. Like with any other profession on this list, make sure to do as much research as you can before hiring someone to work on your property. Start them off with ha a relatively small, simple project before setting them loose on something big, complicated, and expensive where possible.
Hard Money Lender
Hard money loans can be extremely useful tools when used correctly in many real estate investment situations. In fact, I was able to use hard money to help a friend out of a jam and make a 95% return in three months.
A hard money loan, usually taken out for a short time, is a way to raise money quickly but at a higher cost and lower LTV (long-term value) ratio. Because hard money loans rely on collateral rather than the financial position of the applicant, the funding time frame is shorter.
You can find hard money lenders by:
- Googling “hard money lender” with your city or state name (Example “Hard money lenders in Tampa, FL).
- Attending your local real estate investment association (REIA).
- Checking websites specific to investing or general business websites, like LinkedIn.
- Asking a real estate agent who specializes in working with investors.
Insurance Agent
If you are using bank financing to get a deal done, you will usually need insurance. Many real estate investors consider this a necessary evil as it’s another expense that cut’s into their profits.
In order to minimize the negative impact insurance costs have on your profits, you’ll want the help of an insurance agent you can trust. Building a relationship with an insurance agent can help you get better rates. A good agent can help you with getting the biggest discounts available, can get you quotes quickly, and make changes on the fly.
Also, when looking for insurance agents to do business with, you’ll want to try to find one who is also flexible in how and when they are paid so that less money comes out of your pocket.
Choose someone that will take the time to understand your business, is easy to do business with, and has fair rates.
Mortgage Broker
Having a mortgage broker on your real estate investing Power Team is especially useful when you’re securing financing from a bank and especially if you’re planning on using a buy/hold strategy. You can also refer your buyers to your broker if you’re retailing or wholesaling.
A broker’s job is to find you the best mortgage rates for your specific situation. They can save you a ton of time by doing all the research on banks’ specific rates and terms for you. There are a plethora of banks and mortgage products to choose from and while you are a novice broker might be overwhelmed, an experienced broker will use that wealth of options to your advantage.
Mortgage brokers are also much more interested in your success than a bank is. The hard truth is that banks don’t really need to do business with you to make money. Mortgage brokers, on the other hand, only get paid through a finder’s fee that is only paid out when they find a loan that you accept. That means they won’t make a single dollar until they find you the best deal possible.
FindAMortgageBroker.com is a place to start if you don’t yet have a mortgage broker in your Power Team. Check reviews on Google and Yelp and look for comments about:
- Closing times
- Loan success
- Customer service
- Responsiveness
This will all help you paint a picture of how well the mortgage broker communicates and how helpful they are.
Private Money Lender
We’ve already talked about hard money lenders and how useful they can be. Private money lenders are similar but there can be a lot more upsides when dealing with them. Often times, hard money lenders will have specific requirements you’ll need to meet whereas private money lenders just want the agreed-upon interest rate on their loan.
There is no official “private money lenders’ club” or organization. Often times, these people can even be your friends and family.
However, finding someone who would be willing to loan you tens or hundreds of thousands of dollars without imposing too many hoops for you to jump through will likely take a long time.
Property Management Company
having a property management company as part of your real estate investing Power Team is particularly important if you have a large number of rentals such as leasing, rent collection, maintenance, handling showings, and evictions.
There are pros and cons to hiring a property management company. The biggest, most noteworthy con is that you’ll have to take a cut in your profits from your rental income in order to hire them. The typical rate is 4%-12% of total income earned as a monthly fee. That’s a lot of cash, so you’ll have to make sure it’s worth it.
The times when you’ll want to hire a property management company are:
- when your rental or investment property is physically far away from you,
- you have multiple properties and you couldn’t possibly manage them all yourself,
- you’re a part-time real estate investor with a separate full-time job.
Check out AllPropertyManagement.com to find property management companies in your area.
Most states require that property managers/management companies have a real estate broker’s license or a property management license in order to show vacant apartments. Check out all property management laws by state here and check with your state’s Real Estate Commission to see if a candidate’s brokerage license is active.
Real Estate Agents
Real estate agents are the second member of your team that can provide you with useful information regarding the sale value of a property. They can provide you with valuations of comparable properties in the same neighborhood thereby helping you with your ARV estimation.
To find these agents is your local real estate club or meet-up. Ask them if they work with cash buyers and, if so, collect their contact information. Be sure to discuss how they can expect to be compensated their 3% on the deal. No one wants to work for free.
Someone with a Buyers List
You may have worked hard over the years putting together your own buyers list but maintaining that list can be difficult. It requires that you stay on top of it at all times so that you can be sure that you’ll always have a buyer lined up before even purchasing a contract, or so that you can sell a contract as soon as humanly possible after you purchase it.
Sometimes, you might find yourself in a position where you can offer a property that would be a perfect fit for someone who prefers turnkey rental properties, but your inventory consists mostly of properties that would appeal to a rehabber.
Not finding a buyer for the contract in your possession in a timely manner can be a serious problem for a couple of reasons.
First, your amount of personal risk is dependant on how your contract is written. No buyer means no deal and that means you may have to repay your seller.
Secondly, if other people find out that you can’t reliably complete deals, sellers will become far less likely to trust you.
If you’ve somehow found yourself in a situation where you have a solid contract in your hands but nobody to sell it to, True Freedom Achievers can help. They have decades of experience, a solid buyers list, and will work with you to make sure you’re able to get that contract in the hands of the right person.
How to Build a Power Team
The classic methods work best here. The absolute best place to find Power Team members is through referrals and networking. When a brand-new professional that you’ve never met is introduced to you by someone you already trust, that lends a lot of credibility to their character, and networking events allow you to meet many professionals at once.
Of course, once you meet someone that you think might be a good fit for your team, there’s still more work to be done. You’ll want to do your due diligence, get to know more about them, and, when possible, ask them to help you with small, relatively non-essential tasks before asking them for help with big, important ones.
Providing Value to Your Power Team
In order to get the very best performance from the professionals on your Power Team, you’ll want to make them WANT to help you and do business with you. The best way to do this is to understand how you can make their life better through the working relationship they have with you.
In order to do that, of course, you’ll want to know specific details about their business and what makes them tick as people. Here are some questions you might want to keep in mind when you’re developing a relationship with each member of your Power Team:
- What do you enjoy most about what you do?
- What makes you different from all your competitors?
- What kinds of deals, jobs, or clients do you like working with most?
- What’s the best way to promote your business?
- What’s your biggest business challenge right now?
- How can I help?
By asking these questions, you’ll develop a great report with every member of your Power Team and have all the information you’ll need to help make their professional lives better. Then, when the time comes for you to ask for their help, you’ll find they’ll enthusiastically lend you a hand with whatever you need.
