The key thing to being successful in residential real estate is to surround yourself with the right people. That means building the right team. If you’re going to get and control properties, you want to have access to those individuals that are going to help you acquire the inventory.
I like to start building my team with experienced real estate agents. When I talk about experienced real estate agents, I mean someone you can effectively work with and who understands your business.
As we’ve seen in recent years, especially before the crash, a lot of people started jumping into real estate. So anybody — even your neighbor who used to be a mechanic — all of a sudden became a real estate agent.
There’s nothing wrong with that, but the fact is experience helps and it will get you out of trouble when you really need it. Fortunately, those that have stayed through this cycle have learned the ins and outs of the system are going to be able to thrive through what’s coming up next in the residential real estate cycle, and that is key.
You will also want to look for licensed contractors. Some projects require an experienced and licensed contractor, not just a handyman. Don’t get me wrong: Handymen are great as well. You do not need a licensed contractor for every type of work. There are minor things such as painting or crown modeling, little details that a handyman can do. But oftentimes you need somebody that’s going to be able to submit the paperwork to the county, get the license, get the permits and have the expertise to tell you what the structural damage is on properties, and a licensed contractor is a required team player.
I recently got a call on a property from a concerned investor with whom we had previously worked. He told me he’d purchased a fourplex in Huntington Beach, California, through a third party, and he found out the property had about $140,000 of structural damage.
He ran into this problem because he did not partner with the right team. The agent that helped him get into that property was not an experienced agent. The investor had a handyman — instead of a licensed contractor — do the inspection of the property to determine whether it was a good purchase.
If you don’t have the right team in place, you can get into situations like this. The property itself may look like a great purchase, the numbers are great, and you even have an end buyer in place. But, because you did not have the right team in place, you get stuck with losses that could really hurt you.
You’re always looking out for your business. If you’re going to be successful in residential real estate on a bigger scale, remember that it is a team sport.