Outsourcing the work in your real estate investment can seem counterproductive when you're just starting out. It can feel like success will be a product of your blood sweat and tears alone. From property research to acquisition, renovations, maintenance, tenant management, and everything in between you feel like you're the only person going to do things correctly and on time.
This self-belief is a big reason why you'll be successful, but it also poses risks as you grow your operations. Eventually, the scales are going to tip. You'll end up stretched too thin and mistakes will get made, or you'll have no time to expand your business, pursue other opportunities, or enjoy the fruits of your labor.
You didn't get into this business to answer midnight calls about a tenant's leaky faucet or refinish a roof on a scorching summer day. Your time should be spent pursuing ROI-generating projects and growing your portfolio. Sooner or later all real estate investors, particularly those who manage a portfolio of rental properties, will need to outsource their work. Time will become your most valuable asset and any incremental costs will pay back ten-fold as you scale your business.
Bringing on skilled, trustworthy parties to help you on the edges will do more for your business than the marginal savings you'll yield by doing everything yourself.
With years of experience working with real estate investors at every stage of their professional development, these are the specialists that The Hard Money Co. most recommends that you bring onto your team.
As a property owner, the list of vendors and contractors you have at your disposal should be long and deep. You will need specialists for any number of problems that might arise. This is especially true if you're managing multiple properties. As you add properties to your portfolio, these one-off contractors become frequent collaborators, and the time it takes to manage them and their work can become prohibitive.
Bringing on an experienced, trustworthy general contractor can dramatically reduce the burden of managing these specialists. Having someone looking out for your interests, who is familiar with every inch of your properties can be one of the most valuable investments you can make. Their ability to pre-empt issues and quickly find solutions will reduce the fallout from problems, keeping your tenants happy and your properties profitable. Whether they complete the work themselves or hire from their network of specialized vendors, you can be confident that your dedicated GC is taking care of your properties leaving you time to pursue new opportunities.
Renting out your first property can be an exciting experience for new real estate investors. Finding quality tenants, signing the lease, and collecting the first rent check means that you've arrived as an investor. But that warm feeling can quickly wear off when you receive your first call about a broken furnace in the middle of the night, or your perfect tenant starts missing payments. While these may be manageable problems on a small scale, they can quickly outpace your abilities as you add properties. Bringing on an experienced project manager or management company can dramatically improve the efficiency of your property management and with modest rates, can even be a profitable decision in the long run.
The cost of a typical property manager averages between 8% and 12% of monthly rents. While this may seem like an avoidable expense, the work that they do can pay for itself beyond the time and energy spent managing existing tenants. If you have multiple units in your portfolio, a property manager's ability to collect rent and reduce vacancy can boost your bottom line.
Additionally, their ability to vet tenants will make your life easier. A management company will have the tools and resources to find quality, low-maintenance tenants which will reduce turnover and ensure that the ongoing management of your property goes smoothly.
Real Estate Agent
Expanding your real estate business means expanding your portfolio. The fundamental component of this process is finding properties that you can exploit with your investment strategy. As you move into new and unfamiliar markets, your ability to accurately assess and analyze properties will be stretched thin. Working with experienced agents who are local to these markets can streamline the process of property research. They understand how the dynamics of a particular area function and can provide useful insight into the trajectory of a particular neighborhood. Additionally, they can keep their finger on the pulse of a market, knowing when prices may be moving and helping you anticipate these market forces.
Establishing an ongoing relationship can also be financially viable for both of you. Talk with your agents about a reduced commission structure as volume increases. If an agent knows they have a willing and knowledgeable buyer ready at all times, it may be worth a few points on the transaction. Even if you can't find a deal, the benefits they bring to the table will be worth it in the long run.
Every transaction you undergo has a mountain of legal documents that support it. While it may seem that every property could be well-served by boilerplate copy, the reality is that each deal brings a set of unique circumstances to the table. Navigating these legal obstacles5 Numbers That Define Your Real Estate Investment can be time-consuming and mistakes can be extraordinarily costly. Establishing a relationship with an attorney should be a step you take early in your investing journey and you should continue to lean on them as you build your business.
Working with a lawyer protects you on the front end of the transaction, but this relationship becomes crucial if a conflict ever arises. Having someone in your corner that’s responsive and familiar with you and your business can head off potential issues. This will ultimately save time and money while protecting you and your assets.
Relationships are Everything
The specialists we've listed here are just the tip of the iceberg when it comes to real estate investing. As your strategy shifts and your business grows, you can layer on any number of other resources ranging from cleaning services to marketing, landscaping, financing, title, and more. The expansion of your team adds competency and efficiency to your work while freeing up the capacity to explore new channels for growth. Most importantly it signals the maturity and professionalization of your business.