Every someone or firm that achieves great success all the time does so with the help of others. No one can do it alone. Yet many population who start real estate investing or any firm try to do all things themselves. This severely limits their potential to succeed, as everyone has a tiny whole of time in a day. either you are just getting started or are a seasoned investor, the best method is to use the services of trained real estate professionals with discrete areas of expertise, to originate 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 quarterly basis:
- Accountant - wage taxes are complex sufficient without trying to keep up-to-date on the newest tax laws for real estate. Every investor should hire one right from the start.
- Bookkeeper - Entering receipts and invoices seems easy enough, so most population try to do this themselves. Yet most do it so poorly they do not have the potential to run clear reports and decree 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 up-to-date 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 aid is cheap and will buy back much of your costly 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 speculation real estate themselves.
- Insurance Broker - All lenders will insist that the property they are financing be insured, so you will need an guarnatee agent to dispose this. You may also want to explore extra liability guarnatee if you have rental properties, or life guarnatee to cover mortgage liability if you have joint speculation 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 speculation properties. Once you find one, hold onto them like gold -- they are your traditional 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 incommunicable lenders. Keep in mind, however, that both fees and interest rates for smaller, incommunicable lenders can be substantially higher than bank rates.
- Property Manager - This is probably the first task that new investors endeavor to do themselves. While it's a good idea to learn what is complex in asset management, buy more of your time back and hire a good asset employer to take care of your properties. The asset employer 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 need the use of skilled tradespeople to accomplish the work. Unless you have experience with a single 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 finally placed 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 request 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 company who are investing and using various professionals, chances are they have already gone through the process of trying out discrete professionals. Don't waste too much time trying to find the perfect team -- if someone has used a expert and they contribute 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 foremost 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 finally 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 all the time treat your team members with respect, professionalism, and loyalty and ultimately, you will succeed.
RRSP Home Buyers Plan:Real Estate Investing - Creating Your Power Team
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