When someone decides to get into real estate investing, he is in danger of making what Ken McElroy calls a rookie mistake, by trying to save money skimping on hiring experts before he starts actually buying real estate. McElroy, who wrote “The ABCs of Real Estate Investing,” insists it is vitally important to put together a team of experts before investing in real estate. He says that, though not hiring experts to helping him choose investment property will save the investor money in the beginning, it will cost him in the long run.
There are many benefits to having such a team at your disposal when investing in real estate. For one thing, such a team can spot potential investment property for you. Since they make money when you make money in real estate investing, they will act as extra sets of eyes and ears for you. This allows for a division of labor and will keep you free to spend your time investigating and buying real estate they’ve already found for you.
Expert Analysis Matters
In addition to this, your experts can see things that you will miss. If this sounds good so far, you may be wondering just what kinds of experts one needs when buying real estate. The very first people you need on your team are those who will help get your real estate investing business set up properly: Your attorney and accountant.
In the very beginning, make sure that you have the laws and the finances covered. Bookkeeping is very important in everything-doubly so when investing in real estate. There is far more to investing than making deals on investment property.
The next wave of team members for your hunt for investment property are the real estate broker, investors and a lender or mortgage broker. These go together because, when asking for money for your real estate investing project, you will need to present something concrete to your investors or lender.
They will want to see the potential deal that you have found. They will want to feel confident that they will get a return on their investment. Lenders and mortgage brokers can be a good source of money for those interested in investing in real estate.
The Construction Team
When it is time to visit an investment property that interests you, it is important that you take along the experts who understand building structure, such as architects, contract rehab specialists, industrial hygienists, structural engineers, surveyors and appraisers.
That sounds like a lot, but these experts can spot structural problems that you will not be able to see. Real estate investing involves the expert application of many disciplines and one investor simply can’t be expected to master them all, no matter how long he has been investing in real estate.
Unless you want to take a real hands-on approach to the investment property you purchase, you will need to hire a property manager. Some property owners choose to manage their own properties, and that’s fine if that’s how you wish to approach real estate investing. Perhaps it would give your operation a grassroots, rather than a corporate feel.
Of course, since he runs a property management company, McElroy advises everyone investing in real estate to outsource management. He does make the valid point, however, that it saves time and allows management to be carried out by experts, which could save you money in the end.
Finally, in order to complete your real estate investing team, you will need to hire an insurance agent, a property tax consultant, an income tax consultant and an estate planner.
When you decide to start investing in real estate, you are doing it so that you can make a lot of money. You should assume you will be successful. Therefore, you should do it correctly right from the start. If you don’t have the money to hire the experts, wait to purchase your investment property until you do.
Hiring them is an investment in itself, which will pay off in the end. Skipping this step, on the other hand, will cost you in the end. This is about preparing for your future. Buying real estate is much too important a thing to do halfway.