Investing in real estate can be a lucrative decision with many advantages. However, it may not be as easy as some industry professionals or investors make it appear. Like any other investment, investing in real estate requires significant research, knowledge, and industry expertise.
If you’re interested in small real estate investing, it’s crucial to have a team of professionals to guide you. These experts each have important roles in the various legal and professional aspects of real estate investment and can help you achieve your goals. In this article, we’ll guide you through the key professionals you need to consult when starting out. We’ll explain their roles, and why they’re important, and offer tips on finding the right professionals to support your investment journey. Whether you’re new to real estate or have some experience, this guide will help you build a strong foundation for successful investing.
Building Your Real Estate Investment Team
Many people get started in small real estate investing to generate passive income and diversify their income streams. While this may be a solo endeavor or side hustle instead of a full-time business, connecting with the right industry professionals is vital to starting off on the right foot. Your real estate team will be composed of professionals with experience in the varied aspects of finding properties, navigating the legal aspects of real estate investing, and essential maintenance.
1. Real Estate Agents and Brokers
Whether you’re investing in real estate in your hometown or another area, you need a professional with current knowledge of the local real estate market. Experienced realtors, real estate agents, and real estate brokers have the most updated information about local properties and have an in-depth understanding of the local market. They can help you find investment properties, learn about local property values, and invest wisely.
When seeking a real estate agent or broker, search for a professional with several years of local experience. Take the time to read client reviews and consider whether the agent is experienced in working with investors. If you’re interested in flipping homes or renting, your agent or broker could prove a valuable resource for connecting you with the right buyer or tenant.
2. Real Estate Attorneys
A real estate attorney is a professional licensed to practice real estate law. These legal counselors know the ins and outs of real estate documents, legal processes, and challenges like title concerns or evictions. In any real estate sale, a real estate attorney prepares and reviews all documents signed at closing. They also provide essential advice regarding local regulations and potential legal challenges.
When seeking a real estate attorney, search for a professional with experience in real estate investments. This experience will be invaluable in helping you:
- Form a legal entity for real estate investing
- Set up a legal structure to work with other industry professionals
- Navigate disagreements, misunderstandings, and disputes
- Partner with other investors
3. Accountants or Tax Consultants
Understanding your financial position and the money you’ll use for investing, is a critical part of successful real estate investing. Tax incentives and regulations vary by location and the different ways real estate investors make a profit. A real estate accountant specializes in financial strategies and reporting for developers and property owners. They perform duties including tax preparation, consulting, strategy, budgeting, and preparing annual reports.
When seeking a real estate attorney, consider their certifications and licenses, the tax areas they specialize in, and their local experience. A professional with extensive local industry experience will be up-to-date on changing regulations and your requirements.
4. Mortgage Brokers or Lenders
You need money to make money, and most early investors aren’t in a position to purchase a property out of pocket. While your credit rating and good investment decisions can be a factor in getting a loan from a variety of lenders, a qualified mortgage professional has more to offer than access to capital. Your mortgage broker can educate you on the different financing methods available and assist you in finding the best loans with good interest rates and terms.
When seeking a mortgage lender, search for a professional who frequently works with investors. Ask questions about how they conduct long-term business relationships and the value they can add to a real estate business.
5. Property Managers
As a real estate investor, you may not want to take on the role of a landlord or property manager. If you invest in properties other than where you’re located, or if you have a full-time job, you may not be able to be available for your tenants. A property manager handles tenant calls, building and property repairs, bookkeeping, leasing vacant units, and oversight of empty properties. These professionals may even schedule and attend inspections and other appointments as needed.
When hiring a property manager, it’s essential to seek a trustworthy professional with experience in your area of real estate. For example, landlord duties require full-time availability and interactions with tenants. If you’re in the business of flipping houses, a manager with experience meeting with inspectors, contractors, and electricians can come in handy.
6. Real Estate Appraisers and Inspectors
Unfortunately, not every property you choose to invest in will be what it seems. While a firm understanding of issues that lower property values is helpful, some flaws lie beneath the surface. This is why a professional inspection is often required or recommended during a home purchase.
As a real estate investor, you need to know the value of a property and any potential concerns about its condition. A home appraiser examines a property and estimates the market value based on various features and other market indicators. A home inspector goes over the interior and exterior of a home with a fine-tooth comb to seek out any issues that will require repairs. These professionals help you make sound investments and can offer advice about improving the value of a property.
The requirements for inspectors vary from state to state. Meanwhile, an appraiser is skilled in real estate transactions and regulations. When seeking a home inspector, find a professional that is licensed by the state or is a member of the American Society of Home Inspectors. When finding a reputable appraiser, the online tool provided by the American Society of Appraisers can help you search by location and level of expertise. Your real estate agent may also be willing to offer a recommendation to help you connect with qualified local professionals.
7. Contractors and Developers
Unless you’re experienced in professional construction, relationships with professional contractors and landscape developers are crucial to successful real estate investing. Many real estate investments require major repairs or rehabilitation before they can be used. Electrical wiring, plumbing, roofing, and many other building features require professional knowledge, tools, and experience. By partnering with a general contractor, you can work with a professional you trust to find qualified professionals for whatever concerns arise.
Real estate investing is a lucrative undertaking that can be a good way to increase your income. However, it’s a professional industry with many working parts. To make sound investments and avoid legal issues, you need to partner with a team of professionals with real estate experience and relevant knowledge in each category associated with real estate.
How to Find the Right Professionals for Your Team
While it’s important to know which professionals you need on your team, understanding how and where to find these individuals is equally vital. Here are some actionable tips:
Real Estate Agents and Brokers: Look for agents and brokers who are active in your local area or the area where you intend to invest. Consider their reputation, reviews, and track record. Real estate websites, local listings, and investor networking events can be great places to connect with these professionals.
Real Estate Attorneys: Seek referrals from other investors or local real estate agents. It’s crucial to find an attorney who specializes in real estate transactions, so you might consider contacting your local bar association for recommendations.
Accountants or Tax Consultants: Try to find an accountant who specializes in real estate investments. Local financial forums, referrals from fellow investors, or professional accounting bodies can be good starting points.
Mortgage Brokers or Lenders: Mortgage brokers often advertise their services online or in local business directories. It’s also worth asking for recommendations from other investors or real estate professionals.
Property Managers: If you’re investing in a rental property, finding a reputable property manager is important. You could start by looking at online reviews or asking for recommendations from other landlords in the area.
Real Estate Appraisers and Inspectors: Your real estate agent is a good source for recommendations. Additionally, you can find certified appraisers and inspectors via professional associations, such as the American Society of Home Inspectors or the American Society of Appraisers.
Contractors and Developers: Local business directories, referrals from other investors, or recommendations from your real estate agent can be excellent sources for finding reliable contractors. Additionally, attending real estate networking events or visiting construction sites in your area can help you make connections with skilled professionals in this field.
Remember, when you’re assembling your team, take your time to interview potential candidates and make sure they understand your investment goals. Building the right team may take time, but the payoff in successful investments will be worth it.
Frequently Asked Questions
Why do I need a team for real estate investing?
Acquiring a team for real estate investing isn’t the same as hiring employees or partnering with others to create a co-owned business. It’s the act of connecting with industry professionals to form a support system that helps you tackle all of the requirements of real estate investment. A real estate team makes your job easier and helps you navigate the many legal requirements in the industry.
What is the role of a real estate agent in investing?
Local real estate agents have a wealth of up-to-date knowledge about the property market, available properties, sound investments, and other critical factors. They can help you find properties, establish investment strategies, and connect with other professionals like local inspectors and contractors.
How can a real estate attorney help me in investing?
A real estate attorney is a professional who helps you handle all the legal matters related to your real estate investment niche. This often includes documents related to real estate purchases and sales along with legal disputes or concerns.
What do accountants do for real estate investors?
Accountants perform duties including tax preparation, consulting, strategy, budgeting, and preparing annual reports. They can also help you learn about tax breaks related to running your business and purchasing real estate.
Conclusion
Building a strong team of professionals is a critical step in your journey as a small real estate investor. By surrounding yourself with knowledgeable and experienced individuals, you equip yourself with the resources necessary to make informed decisions, navigate potential obstacles, and maximize your investment potential. It’s about creating a supportive network that works together toward your success. Always remember, real estate investing is not a solo endeavor, and the strength of your team often defines the success of your investments.
