Building Your Team
by P. Ellis for CanadianFinancialFreedom.com
It has been often said that a total whole is not equal to the sum of its parts. Even though mathematically, this obviously doesn’t compute, in real estate it most certainly does.
Just like when you build a home, in most markets, the sum of the parts is a lot less than the value of the whole, your success in real estate is directly attributable to the sum of your
parts. The total value of your team is worth more connected than apart. The group of people you can depend on to be at your disposal when you most need them, when the deal is in
front of you, are crucial to your success.
Even if you haven’t started your career in real estate investment, you can still start building your team. It’ll take some time to find each member of your team, but when you do, you
see your system working like a well oiled machine.
Remember that the various members of your team should be investors themselves. Only an investor will see a project the way you do. When you’re looking for team members, you
should ask them if they’re investors themselves. A contrarian opinion is that if your Realtor is an investor, they’ll keep the best deals themselves. This is a short sighted idea, as we
all know that each of us cannot do every deal that crosses our plate. We also know that although a deal is a great deal, it’s not necessarily a great deal for us at the time. And, of
course, those of us who’ have been investing for awhile know that there’s enough to go around.
Your Lawyer - Your lawyer is an important part of your team. He or she makes sure that all the rules are followed, and checks the validity of the land transfer, securing your rights for
the future. If your lawyer is one of the ones who uses the new title insurance systems, then all the better. Although you’re charged a little extra for the service, it’s worth it.
Your Mortgage Broker - It is obvious that a mortgage broker is an integral part of your investment process. After all, not finding money makes the deal not happen. Also, dealing with
a broker is better than dealing with your bank. One credit check is farmed out to a variety of banks, which then vie for your business. The broker’s relationship with each bank in their
repertoire is also vital to your approval. He or she will know which bank, trust company or private lender ‘likes’ your kind of project. I once had an extremely difficult sell for a project
I wanted to do. After getting three rejections, I contacted a broker who was highly referred by a friend. Within three days, my deal was sold. I later asked him why he could get it done
so fast, when it had seemed so difficult before; he explained that he had approached the lender he knew was interested in these types of projects and looked at the deal instead of my
personal profile at the time. (This turned out to be my most profitable deal ever!)
Your Realtor - A good real estate agent will be worth his or her weight in gold. They will get to know you over time and start bringing deals to you. They will understand your
investment angle (as they are investors themselves) and will pre-screen things for you - assisting you by not wasting your precious time. They will get to know your style, your
negotiation, the type of deal you like, your comfort zone with a particular locale, your general price range, and all the other things that make you the kind of investor you are. Your
Realtor might also know what you’d like to venture into next, at your next level of investment, so will be on the lookout for those types of properties.
Your Contractor - If you’ve found an amazing Mr. Joe Contractor, you’re ahead of the game. Not only can you ask them to view a property with you to see what it requires, (you’ll get
a better estimate than if you just figure it out on your own), but you can also include them in your profit making. Buy a house, have them repair it - at no cost to you, (with agreed
upon terms), and give him a cut on the profits. You pay him when it closes (and he gets a 30% share of the profits). If he’s an investor as well, he’ll see the value in a mutually
beneficial relationship and work with you to make money. This has the added benefit that allows you to not expend additional cash reserves before you recoup the profit.
Investment Partners - I can’t stress enough how valuable these partners are in your game. They will share deals with you they can’t take (for which you’ll pay them a finder’s fee), they’
ll be there to congratulate you and tempt you to do more, and they’ll be there when you need a helping hand. (Of course, you’ll do the same for them.) Networking this way is a great
way to find like-minded individuals who want to change the course of their financial futures, as well.
Your Tax Accountant - Initially, on your first deal or two, you may not need an accountant. But, after that, you need to buy properties with registered and incorporated companies.
When you start recouping on your investment, you’ll need to know how best to protect your investment. In Canada, there are capital gains taxes on property sold. An accountant will
tell you to refinance and use the mortgage money to get your profit out of the deal. In that way, it’ll be tax deductible, not taxable income. You get to watch the property appreciate and
save your asset.
Real Estate Appraiser - A certified real estate appraiser could save you thousands of dollars in costs, and could help with the negotiation process of purchase and sale. In addition, their
appraisal could save you from buying into a bad deal you thought was a good one. For example, in a recent transaction, the Vendor had provided a recent appraisal which gave a
property value of $150k, the new appraisal gave the property value at $120k. In digging deeper, we realized that the first appraisal included the extra lot (included in the sale) but not
mortgageable. It was only after the receipt of the second appraisal did we recognize this property as a bad deal from the financing perspective. There is also a less emotional and more
factual representation of the property’s true market value.
Surveyor - Notwithstanding the fact that title insurance has almost wiped out the need for a survey, there is still a crucial role to be played by a surveyor. They define the lines of your
property, and in times where clarity is important, can help you avoid problems associated with lot lines, easements, and right of ways.
All in all, the members of your team are crucial to your development as an investor. You will not succeed to the level and degree that you will with these integral partners.. You also
need not limit yourself to one member for each group. For example, you might have several agents working for you in the specific areas you’ve designated as target areas for your
investment. You might have more than one lawyer, and will most likely have more than one contractor to call upon. Remember the weakest link? Pay attention to your team-building
skills and your real estate investment career will soar!