This is the first of a series of articles I will be writing on some of the proven methods to obtain a yearly six figure income as a real estate investor.
The goal of every real estate investor is to make a comfortable living. For some people this may be making an extra few thousand dollars a month. For others it could be millions of dollars a year. As a new investor your first goal should be to obtain a sustainable six figure income and then build from there. There is no one specific way to accomplish this goal. But there are some basic principles you will want to employ to get started in the right direction. In this article we will talk about assembling your real estate team.
No matter how skilled you may be in real estate, you can't do everything on your own. Even if you think you can, there are only so many hours in a day and by trying to be the sole worker on your team you are automatically putting a cap on the number of deals you can get closed. So who are the people you want to surround yourself with?
Real Estate Attorney. Even if you are a real estate attorney you will still want to associate yourself with one. The old saying an attorney who represents himself has a fool for a client is no truer than when it comes to real estate investing. The nature of the business alone causes you to get emotionally involved in your deals. The negotiations, due diligence and potential profit causes you to push for the deal when maybe it might be better to walk away. You will want an objective opinion from a real estate attorney. This is someone who is not emotionally attached or involved with the property, someone who can see the faults of the deal and give you an honest opinion on what is minor and can be fixed or what is a deal killer.
Also you may think the expense of a real estate attorney is not worth it. However this could not be farther from the truth. Inevitably at some point in your real estate career you are going to be working with either partners or other parties who might be unscrupulous. When you feel as if you are being taken advantage of there is no greater feeling than knowing you can pick up the phone and have your attorney who is on retainer take over the situation. A $1000 retainer placed with a good attorney can save you tens of thousands of dollars in a deal thats about to go sour .
Title Company. Having a good working relationship with a title company is one of the main keys to a successful real estate career. Most of the problems that come up during the due diligence phase of a negotiation involve title issues. You never want to use the title company of another party to the transaction. Simply put , they will not have your best interests in mind when determining the quality of the title. You always want to use your own title company who can give you the true picture of every possible problem that may exist on the property and how they can either be fixed or if they will cause the deal to be unclosable.
Title companies have different guidelines when determining what is a title problem and what is not. What may seem like a non issue to one title company who is working for the seller may be a deal killer when discovered by your title company. You also will need a title company who is flexible when it comes to the ins and outs of property financing. Not all of your deals are going to follow the traditional route of getting a mortgage from a lender. Creative financing is critical when it comes to putting a successful deal together many times. If a title company doesn't know how to work with lease-options or blanket mortgages then they could kill your deal. Take the time to interview several title companies to find one that is the right fit for your style of investments.
Real Estate Appraiser. Developing a good, long-term relationship with a real estate appraiser who is completely familiar with the market can save you thousands of dollars on a deal. First and foremost, a knowledgeable appraiser can give you the true value of a property. If you depend on the value from the seller's appraisal it could be tainted by the appraisers relationship with that seller and be on the high end of what the property is really worth. However having an appraiser who works for you on a consistent basis will make sure his values reflect what the property is truly worth to you. This not only helps in your negotiations but can save you from overpaying for the property.
Also, having an appraiser on your team means you can call them up when looking at a property and ask them to do a “pencil search” on it's value. A pencil search is when an appraiser looks at the basic information of the property, and the local comps, and comes up with an estimated value for the property. While it is not as accurate as a full scale appraisal it can give you a starting point for your negotiations and even let you know if a deal is worth pursuing at all.
Real Estate Agent. Again, you may feel like the commissions you will pay an agent are not worth the cost. You may think you can successfully market and sell the property on your own. And many times this may be true. However having a relationship with a good real estate agent is often going to get you buyers you otherwise may have lost, or if you are the seller, bring you deals you may never have found. They also are experts at networking and if they are well known in the industry can give you instant credibility as an investor. This alone is worth the cost of any commissions they will earn on your behalf.
Daniel Doran is a 20+ year veteran in the real estate industry. He is a previous owner of a law firm, mortgage and title company. Daniel has also written several books on mortgage modification, short sales and real estate investing. He currently specializes in Commercial Finance and Real Estate Development and is a graduate of Manhattanville College and Brooklyn Law School. You can contact Dan at Buildings By Owner.