The 3 Key People You Need To Build Your Real Estate Investment Team
When you're looking to build your investment portfolio, too many times we see people try to do it all themselves. They often tend to get overwhelmed by all that they don't know, and end up not taking any action. It's important to remember that you have very powerful people that can help you get closer to your goals much faster than doing it by yourself.
So just like a three legged stool, there are three key legs to your real estate investor team, and this applies whether you live in that city or not.
#1) An Investor-Focused Real Estate Agent
There are a lot of fantastic real estate agents out there in the residential space, and some of them have investors they work with on the side, yet if you're looking for top notch knowledge and experience to give you the best opportunity for success, it's a great idea to find somebody that works primarily with investment real estate.
In many cases (not all), the buyers agent commission gets paid out of the commission the seller pays to the listing agent for on-market properties. For someone looking to purchase investment properties, this means you get all the experience of an investor-focused agent without having to pay anything (or not that much).
In other cases, a great investor-focused agent might be able to find you an off market deal that's going to be such a great deal that you're absolutely willing to pay them and still end up with a fantastic property that can make you a ton of money. A great investor-focused agent should add a ton of value to the transaction, so if you have a great agent, they'll be well worth it.
Don't try to go at it alone, especially in the beginning as you're learning. Leverage the power of a great agent to help you find a great deal that's going to make you money.
NOTE: We cover how to find an investor-friendly real estate agent in our article here.
#2) A Great Lender That Understands Investment Property Financing
Similar to an investor-focused real estate agent, you want to have a good quality lender that understands investment real estate. Many residential lenders have products that can work well for investors. Some have better products out there, but it's so much more important to that.
Your first property could be the first step in a future strategy that's going to build and evolve over time. You want someone that understands that strategy and can recommend products that are going to allow you to implement that strategy.
Smaller local banks and lenders are going to be great options here. Large banks like Wells Fargo, US Bank, Bank of America, etc. may be a good option if you're looking to unlock a Home Equity Line of Credit (HELOC) to fund a down payment on a rental property, but they aren't going to be the first call for an investment property mortgage. They have tight, more established systems and processes. You're looking for someone that is flexible, is willing to understand your situation and be willing to work and adapt with you to find a good fit for you.
Another thing to consider is to ask your smaller banks and credit unions about commercial or portfolio products. Typically commercial loans are for properties of 5+ units. However, some lenders will be able to use commercial or portfolio products for properties under 5 units. It's worth asking to find out what they offer.
Your investor-focused agent may have some recommendations of lenders to reach out to. Remember, your situation may not be a fit for every lender, so don't get discouraged if someone says no. Keep going! You can find someone that understands your situation and will be willing to lend to you!
#3) Property Management
You may have intentions to manage the property yourself, maybe not. At the least you want to have some connections for things outside of the scope of what you can handle on the property. You'll want an electrician, plumber, HVAC, perhaps even a good handyman, depending on the scope of work you'll need.
Do you have a lease? How will you screen tenants? What happens if a tenant is late on a payment? Will you show the property to get it filled?
If you're looking to scale your investment business, eventually you'll plan to look to a property manager to handle all of these things for you. So it may be worth considering to have that done for you now, and latch onto the knowledge and experience a good property manager can provide. They'll take care of all of this in addition to doing all the work on your property, and if they can't do it themselves, they have a list of vendors they've worked with in the past.
Your investor-focused agent and your lender may have some good contacts in this space as well.
There you have it. The three key relationships you'll need: and investor-focused agent, a great lender who understands investments and how to position you and execute based on the strategy that you want, and then good boots-on-the-ground people, property managers, and contractors that can help fix up your property and execute on the work that you need.
Don't hesitate to reach out to me if you have any questions. I'm an investor-focused real estate agent and have connections to other investor-focused agents around the United States. Together we can work to help find those other legs of the stool for you. Having great people in your corner will help you execute on your strategy much faster and more efficiently than trying to go at this alone.
