Creating Your Power Team
Every person or company that achieves great success always does so with the
help of others. No one can do it alone. Yet many people who start real estate
investing or any business try to do everything themselves. This severely limits
their ability to succeed, as everyone has a limited amount of time in a day.
Whether you are just getting started or are a seasoned investor, the best method
is to use the services of trained real estate professionals with various areas
of expertise, to create a real estate power team.
What sort of professionals should you use? To give you some ideas, here are some of the professionals we use on a regular basis:
- Accountant - Income taxes are complicated enough without
trying to keep up-to-date on the latest tax laws for real estate. Every
investor should hire one right from the start.
- Bookkeeper - Entering receipts and invoices seems easy
enough, so most people try to do this themselves. Yet most do it so poorly
they do not have the ability to run clear reports and determine where they
are financially. An investor's time should be spent on activities that can
generate more money (like buying more properties) not data entry.
- Courier - This is a relatively recent addition to our
professional team and we are glad we decided to use one. Why spend countless
hours driving around town, sitting in traffic, just to deliver paperwork to
your bookkeeper or pick up documents from your lawyer? This service is cheap
and will buy back much of your precious time.
- Lawyer - All real estate transactions should use the
services of an experienced real estate lawyer (the fact that they
specialize in real estate cannot be stressed enough). It would also be
beneficial if they have experience with the types of deals the you plan on
doing -- e.g. joint ventures, RRSP mortgages -- or have owned investment
real estate themselves.
- Insurance Broker - All lenders will insist that the
property they are financing be insured, so you will need an insurance agent
to arrange this. You may also want to investigate extra liability insurance
if you have rental properties, or life insurance to cover mortgage liability
if you have joint venture partners.
- Realtor - Most realtors are trained to cater to
residential home buyers, not investors, so it can be a challenge to find a
good realtor who understands investment properties. Once you find one, hold
onto them like gold -- they are your primary source for real estate deals
- Banker - The big banks offer the best interest rates, so
they should be approached first for financing. Remember: lower mortgage
rates equal higher cash flow. It can, however, be more much difficult to
qualify for this type of financing.
- Mortgage Broker - Brokers can offer the best mortgage
rates from the big banks (even lower than their posted rates), as well as
mortgages from smaller banks or trust companies, and private lenders. Keep
in mind, however, that both fees and interest rates for smaller, private
lenders can be substantially higher than bank rates.
- Property Manager - This is probably the first task that
new investors attempt to do themselves. While it's a good idea to learn what
is involved in property management, buy more of your time back and hire a
good property manager to take care of your properties. The property manager
will still need to be managed, but it is far easier than dealing with tenant
phone calls at 2am.
- Tradespeople - Maintenance, repairs and renovations will all require the use of skilled tradespeople to perform the work. Unless you have experience with a particular trade, don't try to do it yourself. It will likely take many times longer, be of poor quality, and may even be dangerous or illegal (e.g. incorrect electrical wiring)
So how did we find our power team? Unfortunately, mostly through trial and
error, trying professionals out until we found ones we liked. Eventually, we
learned to ask the right questions while 'interviewing' them and ultimately
settled on the ones we use today.
If you are just starting and don't know any professionals, or are new to an
area, we suggest using the following approach:
- Phone Book - This is the easiest way to find a team --
just open the Yellow Pages. However, until you gain some experience dealing
with these professionals and asking the right questions, this method is
pretty much hit or miss.
- Referrals - This is probably the best way to find good
team members. If you have friends or associates who are investing and using
various professionals, chances are they have already gone through the
process of trying out various professionals. Don't waste too much time
trying to find the perfect team -- if someone has used a professional and
they provide good service, add them to your list.
- Affiliates - Some professionals, such as lawyers or accountants, will know of or be affiliated with other professionals in their field, or in other fields. If you find a good real estate lawyer, for example, ask them if they know a good real estate accountant.
In the end, it's important to remember that you are only as strong as your team. If one of the members is weak or not performing, give them a chance to improve, but ultimately if they do not, find a replacement. It's your money and your real estate investments -- treat them both like you are running a business. Also, remember to always treat your team members with respect, professionalism, and loyalty and ultimately, you will succeed.
This article is copyright © 2004-2010 Spirepoint Properties. All rights reserved.
Paul Blacquiere and Joanne Beehler are full time real estate investors and have been investing in Ottawa, Ontario, Canada since 2002. They are owners of Spirepoint Properties, a Canadian real estate investing company dedicated to making real estate investing easy.
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