Robert Kiyosaki says “Investing is a team sport.”
We agree! And this is especially true with real estate investing because unlike paper assets…properties aren’t uniform commodities which lend themselves to being traded on electronic exchanges.
Instead, the buying and selling of real estate involves people…lots of them. And so who you have on your team and how you get along with them is critical to your success.
In the studio to talk about who you need on your team and how to pick people who fit well with you…and with each other:
- Your quarterback of conversation and host, Robert Helms
- His co-host waterboy of waxing on (and off from time to time), Russell Gray
- The Godfather of Real Estate, Bob Helms
We think building a portfolio of people is foundational to building a portfolio of properties.
Sadly, many people approach investing backwards.
They find either go out and look for…or through happenstance, stumble upon, a property that looks “good”…and they get into contract.
Then…AFTER the fact…they go look for a mortgage broker, an insurance agent, a property manager, and a local real estate attorney (or maybe they wait until they actually have a problem).
In other words, they build the team around the property. Oops.
In the first installment of this four part series, we talked about the role of your personal investment philosophy in helping guide you to the right market, team and property.
In our last installment, we discussed how to pick a market (geographic, demographic and product type) that is most likely to fit you…based on your personal investment philosophy.
In this third installment, we focus on the how and why of building a team. And not surprisingly, we think your team should be a reflection of your personal investment philosophy.
Warning: Build a team is hard work. It takes time, patience, thick skin and adequate funding.
That’s because it’s an iterative process. And you will almost certainly need to try out a lot of prospective players to find your “starters”.
So where do you start?
Assuming you’ve worked out your preliminary personal investment philosophy…and specifically your values and goals…you should have some sense of culture.
The Culture Club
Every member of your team should reflect your values…and understand their role in helping you achieve your goals.
So your mission will be to communicate your values and goals to prospective team members…then watch their reaction. If they get excited, you’re on the right track. If they don’t…then you might want to keep moving.
Trust is a Two-Headed Creature
Next, you’re looking for people you can trust. Duh.
But it’s more complicated than you might think…because you need to trust you team members in TWO important areas…and you can’t have one OR the other. You MUST have BOTH.
First, you must trust your team’s motivations. You need to know they have your back. In other words, you need to trust their professional ethics.
Just as importantly, every team member must be professionally competent.
An honest, caring, well-meaning…but incompetent…team member can cost you a lot of money. Worse, they can severely tarnish your reputation.
However, a top notch team member that doesn’t really care about you could surgically rip you off…or ignore you in your time of need.
So make sure you’re confident in every team member’s ethics AND competency.
Did you really think we’d miss the opportunity for a double entendre? 😉
So while there are lots of ways to categorize people, one of our favorites is mentality.
Some people see ABUNDANCE…while others see SCARCITY.
Abundance thinkers believer there’s PLENTY to go around. They tend to collaborate, share and contribute.
Scarcity thinkers believe there’s NOT enough to go around. They hoard ideas and resources…and often major in minor issues.
Because it’s important for your team to play well TOGETHER, there’s not always room for big egos. And that means you too.
No one can be too obsessed with WHO is right. Everyone needs to be focused on WHAT is right…in the context of your stated mission, vision, values and goals. They need to be TEAM players.
Also, scarcity minded people focus on getting all they can while the getting is good. We prefer folks who focus on building a bigger pot for everyone to share.
(Sorry…we couldn’t help ourselves…)
Just as a football coach (we could have picked a different sport, but why not pick the best?) has a DEPTH CHART…you need one too.
So there are the various positions you need to fill…and you’ll want to have back-ups…at least for the most critical positions.
Among them are:
Property Manager – who is responsible for managing the income production. This is arguably the most important and least loved player on your team.
Real Estate Attorney – real estate law is very regional. So if you get onto contract or start tinkering with your lease agreements…or worse, end up in litigation…you’ll want good counsel on board.
Insurance – we think you’ll want both an agent AND an attorney to help you select, procure and review you policies. You don’t want the first time you read your policy to be AFTER you’ve suffered a loss.
Mortgage – Most real estate investors are voracious users of debt…and arguably should be. And with rates and programs constantly changing, anyone growing a big portfolio of mortgages needs an expert to help optimize the debt…including cash flow, interest expense, rate risk, equity optimization.
Tax – Nearly EVERYTHING you do financially has a tax consequence. Better to know what that is BEFORE you commit the act…then to find out when you are filing…and paying…your taxes.
There’s a LOT more than this…remember, we warned you it was big task…but these are several of the core members.
Here’s the GOOD news…
When you find just ONE great team member…he or she can usually connect you to one or more others. It’s like hitting a gold vein. You just keep mining it.
In this broadcast, we also cover several of the key questions you should ask any prospective team member.
So grab a note pad and tune into this episode as we discuss putting together your real estate investing team!
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