Create Your Real Estate Investment Team

Real estate investing and especially rehabbing is not a one person show.  The interaction of several different real estate professionals is needed in order to operate a profitable real estate investment business.  In simple terms, real estate investors are basically project managers.  A project manager brings together and directs the right people to accomplish a goal.  The project manager has the vision of what the outcome will be, and it is his or her job to put to together the right team of professionals that can make that goal come to fruition.

The synergy of an effective team is always greater than the sum of the individual contributors.  This synergy is created by the real estate investor through his or her leadership, determination, and vision.

Here’s a tip:  You can find each one of these professionals at your local real estate investment club meetings.

Real Estate Agent

Find an agent experienced with dealing with real estate investors and submitting multiple offers on REO’s and other distressed properties.  Explain that you are a serious buyer and how you plan to finance the purchase.   It is important to establish that you are a serious buyer because the agent wants to know that he or she will be getting paid for their efforts especially when submitting multiple offers.  Providing a list of current REO’s only takes an agent 5 minutes once they know what you are looking for. The process can then be automated to e-mail you all new foreclosures as they come on the market.  A good agent should also be able to provide quick and accurate comps the same day you ask for them.  After establishing your relationship, placing an offer should be as easy as making one phone call and signing a fax.

Hard Money Lender/Private Investor/Community Bank

Contact several hard money lenders and community banks and get a clear understanding of how their programs work and all fees involved.  Submit your financial information to several places and get pre-approval letters to purchase foreclosures from all of them.  It always helps to have a back-up lender to fund a deal if one doesn’t come through.  Once you’re preapproved, all you should have to do is e-mail or fax your agent the signed contract and wait for the clear to close phone call.  When dealing with someone for the first time make sure to check on the progress of the loan on a regular basis.  Dealing with private investors will greatly simplify your life.  Just get the proof of funds statement over to your real estate agent and start submitting offers.

Mortgage Broker/End Lender/Private Financing Company

Even if your plan is to flip your rehab home with no intention of holding it as a rental, you still have to make sure you have an end lender that can refinance your hard money loan or cash out your private investor if your sale plans fail.  Mortgage brokers do not have as many good programs as they used to (mainly due to the new government regulations imposed on the lending industry) but still check with them to see what programs they have available to refinance your construction loans.  There are private funding companies out there that still cash out deals up to 65% of ARV (after repaired value). Finally, the refi headache can be avoided altogether if your local community bank offers investor combo purchase/construction loans. See the article on local community banks to see that this can be your one stop construction funding and end loan source.

Construction Team

In order to streamline your property rehab business, work on finding a dependable construction manager to handle the details of each rehab and its subcontractors.  It may take some time to find a construction manager that is dependable, trustworthy, and knows when to call and when not to call when there’s a problem.  In the beginning, plan on being at the job site every day until you’re comfortable with the performance of your construction manager.

Real Estate Attorney

Buying bank foreclosures, dealing with contractors, negotiating with buyers, and structuring partnerships should not be an overwhelming feat with the proper legal advice of your side.  Once you develop a relationship with your attorney, you should be able to call for quick advice on almost any real estate topic whenever you need free of charge.  This will come in handy when you need quick advice or an opinion while you’re on the go making deals.

Property Manager

A property manager will cost between 8-10% of your monthly gross rents.  Unless you have a partner that has the patience to deal with tenants, hire a quality property manager to handle this aspect of the business for you.  One phone call and one signed fax to your property manager is all it should take to start showing your newly rehabbed home to prospective tenants.  Most real estate investors do not want to hear about tenant problems and maintenance issues.  Your focus should be on finding more profitable deals and cashing the rent checks.  Good property management is priceless.

Insurance Agent

A good insurance broker can take care of most requests with a 5-minute phone call. Whether it is insuring a new property, filing a claim, or sending over proof of insurance to your bank, the process should be quick and efficient.  Establish what rental property riders are most important in your area and have your agent compare rates at several different companies to give you the best deal regardless of their commission.

CPA

Real estate investing can be very tax friendly if structured and run properly.  Waiting until the end of the year is not the time to find out what you could have done differently to improve your tax situation.  After the first few meetings with your CPA, all the tax advice you need should be one phone call away.

Building Supply Pro Desk

Home Depot, Lowes, and Menards all have pro desks that handle large orders for customers.  Ask the Pro Desk what is the minimum purchase amount needed in order to receive a discount on material purchases, it will be around $2,500.  Discounts of 15 – 20% are not unheard of and most stores will gather your items for you.  The only problem is that in order to get these discounts you may have to wait a week to get your material.  Plan accordingly.

Other Real Estate Investors

Make sure to stay in touch with your local real estate investment community.  The exchange of ideas and interaction with others dealing with similar adventures will help push you past the rough times and prosper greatly in the good times.  Always network at these meetings.  Create a list of valuable contacts for one never knows what the future holds.  Also, there is no better way to keep a pulse on your local market than talking to those who are a part of it on a daily basis.

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