Real estate investing is a team sport. You cannot go far sitting in front of your computer and clicking. You have to deal with people. Your first team member is of course your mentor. If you have not read the post on getting a mentor, now’s a good time.
Mentor/Agent: Besides your mentor you are going to need an agent who is active in real estate investing. An agent who invests in single family rental real estate market in the Dallas, Fort Worth, Denton area. If your mentor has a real estate license then he or she can be your agent as well. If you go this route, you should make sure that you trust your mentor enough to make sure that he or she is going to place your interests above his or her own.
Bank/Mortgage Lender: You may have to develop relationships with several banks and mortgage lenders. Typically, you will do two closings on each property. One is to buy the property and another is to get a long term loan on the property after it has been fixed up and rented. Small community banks, area banks and credit unions may be able to offer package deals where they do both loans for you for half the total closing cost. Typically, the first loan is for a short period at a higher interest rate and may cover the purchase price, rehab cost and closing costs. The second loan is a normal 15 or 30 year mortgage. If possible find a mortgage broker who also invests in single family rental real estate.
Insurance Agent: This person will help you get both property insurance and landlord’s insurance. As you start owning more properties, you will start talking about umbrella insurance, liability insurance etc. and it is beneficial to have one agent who has the complete picture, even though you end up buying insurance from different companies. It’s important to make sure you don’t have gaps in your insurance that you are not aware of.
Property Inspector: You will work with one or two property inspectors. Find inspectors who work with investors. You don’t want an inspector who will tell you that there’s paint stains on the carpet or holes in the wall. You need an inspector who will just focus on the big things or the latent defects. Negotiate a price based on reduced work. For instance, if you are going to change all the kitchen appliances, the inspector does not have to spend time testing the dishwasher. Look at prior inspection reports before you select an inspector.
Special Inspectors: Property inspectors may some times need you to get a special opinion from a plumbing, structural, mold, roof or electrical inspector. Sometimes you’ll need professional inspectors for this, other times you can work with contractors who provide an honest opinion. You will develop relationships with roofers, plumbers, electricians and foundation companies.
Closing Agent: When you are buying a foreclosure, the selling bank will choose the title company. When it comes to refinancing your loan from your purchase loan to the mortgage, you may be able to choose your own title company. Your mortgage lender may have a preference though. So as you choose the same bank/lender, you will start using the same title company over and over again. If you like one – as they don’t make mistakes and close on time – try and get them to do more of your closings.
General Contractor: If you want all your rehab to be managed by one person, you can hire a general contractor. Or you can be your own general contractor and hire out the specific tasks to people in that trade. One advantage of having a general contractor could be that they may offer discounted property maintenance services that you can use after your property is rented.
Tradesmen: These are your plumbers, your electricians, your painters, your landscaper, your roofer, your foundation company and others who specialize in one trade or another. Again, work with people who work with investors.
Handyman: You will have one or two handymen on your team. They will not only help you with miscellaneous activities during your rehab but will also do your maintenance work once the property is operational.
Attorney: You will need a real estate attorney to draft deed and other paperwork for you. You may need them to review specific language in seller addenda that you are not comfortable with or draw up LLCs and other business/partnership structures.
Accountant/Tax Adviser: There are several tax benefits to owning and operating real estate. I will write a post on this topic. You will need an accountant and tax adviser who owns and operates real estate and works with other real estate investors.
Other Investors: You will learn from each other and share referrals. Your mentor/agent should be able to introduce you to other investors who are doing what you are doing. Sometimes, when you are in the middle of one deal and are not ready for another, you may share leads with other investors who will return the favor.
Your Tenants: If you are lucky enough to reach this stage, these are the most important people to your business. They are your customers and it’s your job as a landlord to provide them with a clean, functional, updated and safe home.