One of the keys to successful real estate investing is having a quality team on which you can rely. Today we are going to look at the basics of forming a winning team specifically for fix and flip real estate investing.
There are a few basic parts of a successful real estate investing team; the realtor or agent, the finance professional, the property inspector and the contractor. These four parts make up your core group, and these people should be highly professional and reliable. Each one has a specific job, and the better each part of your team performs, the better your chances of being highly successful.
The agent or realtor is the first team member we are going to discuss. This person should be highly experienced and should specialize in the area you are looking to invest in. If you are working in multiple areas, you may end up with multiple real estate agents. This person should also specialize in distressed property sales. This experience is vital in today’s market, as you need someone with the resources and relationships to help you get under contract on the right property at the right price if you intend to be successful at flipping houses.
In addition, you are going to be relying on this person to assist you in the sale of the property. This is just as important as the purchase. The longer you hold a property (typically speaking) the more it will cost you in carrying costs. Sometimes the best agents are those who come as referrals, and if you can get a good referral that can be extremely helpful in locating the best agent for the job.
The next part of your team is the finance professional. Typically speaking, in today’s market, this person is going to be dealing with hard money loans and/or gap funding. It is important to have someone who specializes in these types of loans, someone who can explain the process and someone you can rely on to give you accurate information upfront. In addition, you want someone you can reach when you need them, whether that be via phone or email. You can visit my California rehab loans page to learn more about rehab loans, the process and how I work with clients.
The property inspector is one team member that many people overlook. This is a mistake. The top two reasons I see people lose money on a deal is due to either an over estimation of the after repair value, or an under estimation of the work that needs to be done. A good property inspector can help you identify potential problem areas before you own the property. While you may have the knowledge to inspect the property yourself, and you also may have a contractor who is going to bid for the work needing to be done, the trade off in the cost of a property inspection versus a problem that is unforeseen can save you a bundle.
Knowing all the issues needing correction before closing on a transaction is essential to being a successful investor long term. You want to remove as many variables from the equation as possible so you are investing rather than gambling. A quality property inspector that you trust is going to help you accomplish this.
Finally we are going to talk about the contractor. Remember when I said above that the two biggest reasons I see people fail on their flips is an over estimation of the after repair value and an under estimation of the cost of rehab? Well, having a quality contractor that you can trust correlates directly with that latter statement. There is nothing worse than getting a bid, starting a project, then seeing that bid increase as more work is added. Having a long term relationship with a good contractor who comes in and gets the work done in a timely manner on budget every time is extremely valuable. Finding a contractor like this may take some searching. This is another time where referrals are great, as you don’t want to learn through trial and error that you have made a poor choice in your selection of a contractor.
So in summary, there are four basic team members that you need to form your core group for successful real estate investing. If you are able to put together a high quality team of professionals at each of these key spots, you will be well on your way to success.