To be a successful commercial real estate investor, you need a good team. If you follow basketball at all you will see all the great teams of this era were made up of great teammates. Some examples of this are the 95-96′ Bulls where they won an NBA record 72 regular season games. The reason teams win so many games is the collective team effort each individual plays. Yes, of course having Michael Jordan the greatest player in the world certainly helps but even with just Michael Jordan the Bulls would not be able to pull off such a successful season. This is the same for every business venture including real estate investing.
Your dream team will consist of other professionals who are experts in their trades such as the following:
· Real Estate Agents & Brokers
· Property Manager
· Lenders
· Lawyer
· BPA
Real Estate Agents and Brokers – When choosing an Agent or broker, you want to know that he or she is experienced in apartment investing as opposed to shopping malls or malls. He has to understand financial numbers, why they make a good investment and not sell you a deal based on ‘proforma’ numbers. An agent or broker who actually owns the investment property is a must.
Property Manager – Having experienced property managers can save you thousands and make millions over time. It is not advisable to buy an apartment building without a proper property manager
Lender – The lending environment is quite challenging these days, with all the bank crashes and tougher underwriting requirements. I recommend having multiple lenders but also “in” lenders. Hopefully, this lender has earned your trust on many deals and has proven to be reliable and workable. Having multiple lenders will also give you the ability to complete transactions when some lenders cannot. These are lenders who have power and connections that your favorite lender doesn’t have.
Lawyer – When choosing a lawyer, remember to get a real estate attorney. Don’t just look in the yellow pages and pick one because that would be the easiest and quickest way to get into trouble. This is an area you don’t want to be cheap either! You need a real estate attorney who will not only write and review your contract, but also serve as enforcer of your agreement and to ensure that your interests are protected and maximized. Another area this lawyer will focus on is the proper use of entities and partnerships. Never start or enter into an LLC, Corporation or partnership without proper advice from your attorney. It’s always better to be safe than sorry.
Here are some questions to ask when interviewing an attorney. Also use the attached form to interview your attorney
1. Ask apartment investors and other successful multifamily they use. Go to local real estate investment association (REIA) meetings and get references and recommendations from group members. Ask around 10 people.
2. When you get your list of attorneys, make an appointment with each and interview them. Use your Attorney’s interview sheet.
3. Do they own real estate? You’re looking to work with an attorney who actually owns and experiences investment properties. This is a big difference compared to working with an attorney who doesn’t understand what you are doing.
4. Get a list of three clients for referrals they’ve worked with who they feel will use their services again. Every lawyer is not for everyone, remember you are building your dream team so it is very important that you choose individuals who will do well on your team.
BPA – When selecting your CPA, the process is the same as if you were selecting a lawyer. Look for a CPA who has real estate tax planning and exit planning experience. You don’t want to just pick a CPA who doesn’t understand your goals and your business. Choosing the right CPA can save you thousands and earn hundreds of thousands now and in the future.