As a new real estate investor, be it flipping houses or investing in rental properties, it may be tempting to take a DIY approach. However, in order to maximize your profits, and minimize your losses, it pays to build your real estate investing “A” team.
In this article, we’ll dive into some of the key players that make up a successful real estate investment team – from real estate agents to contractors – so that you can put together an all-star lineup that will take your flips or rental properties to the next level!
Realtor
It may seem like a realtor is an unnecessary expense when looking to invest in real estate.
However, having an experienced realtor on your team can save you time and energy when it comes to finding the right properties.
They can provide you with information on the best neighborhoods for investment opportunities and help you to determine the type of improvements that would be most profitable for each neighborhood.
When choosing your realtor, be sure they have experience working with real estate investors, and are not simply generalists.
Lender
Unless you plan to use cash exclusively, you’ll need a lender as part of your your real estate investment team. If you already have a relationship with your local bank or a mortgage broker, then that’s a good place to start.
However, unlike mortgage loans for traditional homes, loans for properties that are exclusive real estate investments – and particularly for fix and flip investments – typically require special financing.
No matter which lender and loan option you choose, be sure to do your due diligence, including a thorough review of the loan interest rates, terms, and fee structures.
Attorney
An experienced attorney as part of your real estate investment team can help protect your interests and keep you informed about all of the necessary steps involved with flipping houses or owning rental properties.
Additionally, an experienced attorney can advise you as to whether or not it makes sense to put your real estate investments under a limited liability company (“LLC”) or some other type of limited liability structure.
As with each member of your team, do your due diligence when picking an attorney. Be sure they are well versed in real estate law and not simply a generalist.
Contractor
TV shows and the myriad online videos have made the DIY approach to rehabbing properties appear to be a piece of cake!
Unfortunately, they present a distorted version of reality. So while it might seem appealing to take a DIY approach, having a contractor on your team is essential.
When picking a contractor, do your due diligence, and start with references from people you know.
If that’s not feasible, then your realtor may be able to refer you to a quality contractor, or you can check for online reviews, as these can be valuable sources of information.
CPA
Having an experienced certified public accountant (CPA) as part of your real estate investment team may seem “optional only”. However, a CPA can help you stay organized with tax documents and other paperwork.
They can also provide advice and insight into how to most effectively handle finances related to rental properties or fix and flips; things that even experienced investors might miss.
Additionally, a CPA is essential for strategic funding decisions and helping to maintain profitability, which will help ensure your long-term success. Just don’t forget to do your due diligence when choosing the right CPA for your team.
Insurance Agent
No serious real estate investor would consider moving forward with any real estate investment project without securing adequate insurance coverage.
An experienced insurance agent that has a good understanding of what coverage is available and which policies make sense for each individual investment helps investors maximize their income potential.
If your local insurance agent is not well versed on the nuances of real estate investment properties, then look for an agent, like BR Risk Group™ Specialty Insurance, that specializes in real estate investment properties, including fix and flips and rental properties.