A Real Estate Investing Club Is Only As Good As The People In It
There's something not often discussed at the local real estate investing club meetings.
Real estate can be a tough business, very tough.
Navigating the sea of lawyers, home inspectors, mortgage brokers, real estate sales reps, accountants, contractors, insurance companies and real estate investing club meetings can be daunting.
But you must never give up. Ever.
Building a team of professionals around you that knows what they are doing is by far the single most important thing you can be doing. They are the most important piece and should be considered your main partners in your real estate investing club.
It's so much more important than the actual investment property. If you're just starting out creating an asset base of real estate for yourself you may be so focused on the property or attending the latest real estate investing club meeting that you lose sight of the big picture.
Well we're here to make sure that doesn't happen.
You see, investment properties have been around a long time. And they'll continue to be around for a long time. Shelter is "a need" after all. It's one of the nice things about investing in real estate, people actually need it.
However, many investors get so caught up in finding "a deal" that they burn a lot of bridges along the way.
We've seen many a "real estate investing club" miss this important detail.
Here's a quick list of the most common team building mistakes we've seen missed in local real estate investing club discussions:
Working with a lawyer for a few days only to discover that you can save $50 by using a different lawyer. Pulling all the property closing files from lawyer #1 and sending them to lawyer #2. What you didn't know was the advice lawyer #1 gives you on closing day could save you thousands of dollars. Will lawyer #1 take you back as a client when you really need his advice? Maybe, but I've seen many people crawl back to a good lawyer only to be turned away.
- Using two mortgage brokers at the same time to try and save a tenth of a percent off your mortgage rate. Because you didn't tell them about each other they are both working hard for you....even making commitments on your behalf with underwriters. At the last minute you pull the plug broker #1 and go with #2. A few weeks later you want to buy another property and the broker you burned bridges with has private money ready to make it happen but decides he will never work with you again. You end up going to another broker and paying much more in fees than you needed to!
- An accountant charges a fee of $500 to share some tactics around structuring your real estate. Following the advice will save you thousands of dollars in taxes and prevent costly litigation. You decide to take his/her advice and run. You don't pay the bill because you'll just tell your own accountant to implement your new found knowledge and he'll do it for free. When it's done incorrectly you end up facing a huge tax bill.
- A real estate sales rep shows you 6 multiplexes that fit your criteria. She spends days previewing the properties and focuses on areas that she knows are fundamentally strong investment areas. You decide to try and save some cash and negotiate directly with the listing sales rep to save some commission. You call your agent back when you're ready to buy another property and your calls go unanswered. You spend precious time trying to find someone else with the same caliber of knowledge and experience.
- You have an insurance agent quote you on 5 investment properties. Another insurance company gives you a better price. Instead of giving the first insurance contact an opportunity to match the price or explain differences you pull the plug and go with the cheaper company
In the short term each of these moves may seem like the prudent thing to do. After all if you can save $50 or shave off $100 from your annual insurance bill why not right?
Here's the thing...
You end up burning a lot of bridges a long the way. And when you are just starting out you may not realize how small of a world it really is. Mortgage brokers talk to each other, so do lawyers, accountants and real estate sales reps. When you're really in a jam one day and need an experienced real estate lawyer he/she may no longer be willing to work with you.
That $50 you saved up front may end up costing you thousands. Seriously, we've seen it with our very own eyes.
The most valuable thing you are building is your team, not your properties. Even if you are thinking about taking your business elsewhere, because you have every right to do that, make a quick phone call explaining your decision. It *may* save the relationship.
Let me take an extreme example to explain this further...
When Trump ran into serious problems in the early 1990s with his real estate he was able to rebuild.
Although he was a tough negotiator, he always treated the people around him very well. He had his own all star team.
Using that team he was able to re-assemble his empire.
Sure he had some experience at that point. But he also had his team. He had people like George Ross by his side.
He didn't have George when he was just starting out. George is part of his team.
When your property springs a leak, or the financing gets difficult, or you need a contractor asap....it's your team that will help you out.
Have you noticed how Robert Kiyosaki, the author of Rich Dad Poor Dad, constantly talks about investment real estate? You may not have noticed that he doesn't work alone. He has a team of property managers that go in and handle his apartment buildings for him. They are the ones who fix up the building and raise the rent (improving the cash flow and the value).
All wealthy investors work the same way.
We were just speaking with the top apartment consultant in Canada. He's the kind of guy that save you from costly investment mistakes. Definitely someone you want on your team for the long haul.
The most valuable asset in your portfolio is not the properties.
It's your team. They are your *primary* real estate investing club.
Build it, nurture it, take care of it and it will pay off with large returns.
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