« You Can “Flip” Your Way to Success or Get Rich Quick with No Money Down, the Invest Myth | Main | How to Use Options to Acquire Real Estate »
Partners - A Good Thing or a Bad Idea
By eric | November 24, 2007
At MC Companies my partner, Ross, and I have been together since almost day one. His skills and my skills dovetail perfectly. He handles the construction and development and I handle the management and operations. We both handle acquisitions and together we each bring to the deal our own unique perspectives. It’s a great relationship and because we have mutual respect and honesty, it works. It’s great to have someone to whom you are accountable. We’ve accomplished a lot more together than we ever would have accomplished alone.
QUALITIES OF A GOOD PARTNERSHIP
Some partnerships are destined for success and others are doomed to failure right from the start. What makes or breaks a partnership? Here are some qualities good partnerships have in common:
- Healthy debate: You should have room for debate before decisions are made.
- Open-mindedness: You shouldn’t have to spend valuable time continually convincing your partner of your goals.
- Commitment: You should be committed to each other and your goals.
- Similar values: You and your partner should share the same values.
- Accountability: You and your partner should push each other to achieve objectives and have mutual accountability.
These qualities will guide you in establishing a partnership in your business. Now we’ll look at how to partner with others outside your company: setting up your team.
Your All-Important Team
The following lists include all the people and professionals you will eventually have on your team and how to evaluate and select them. While the lists may appear overwhelming, understand that you will accumulate these contacts over time, and you don’t need all of them at all times. There’s no need to run out and start interviewing paving companies, for example, when you don’t have a parking lot that needs resurfacing. You just need a few key team members to get started—an attorney, an accountant, a real estate broker, and a property manager. But here are the full lists to get you prepared:
Before you do anything, even print your business cards and letterhead, get your business set up correctly. To do that you’ll need to talk with an attorney who will advise you about setting up your company. Should you set up a corporation, a limited liability company, or some other business entity? You’ll need to know the pros and cons of each to make that decision. Regardless of which you choose, having a formal company established will protect your personal assets and provide tax advantages to you. If you need more information before choosing your own business team, you should contact:
- Your own attorney. You’ll need this person to file the paperwork with the corporation commission. There are do-it-yourself kits, but unless you know what you’re doing, I advise against them.
- Your own accountant. This person will be able to give you tax advice based on your own personal financial situation.
2. THE PROPERTY SEARCH TEAM
The property search team includes people you will most likely have to find on your own. I recommend interviewing several professionals in each field until you find people you like, who know the market, have your same level of integrity, and who understand they are there to help you achieve your goal. Both of these professionals can also help you establish the rest of your team especially for the property inspections commonly called due diligence once you get into escrow.
- Real estate broker. The real estate broker will help you understand your market and help you find properties.
- Property manager. This person will help you assess the properties you are considering from an operational perspective. They will give you a solid idea of what you are getting into.
3. THE OFFER TEAM
Your property search team will most likely refer some or all of these professionals to you as you need them. That’s another reason why who you choose as your real estate broker and your property management contacts are so critical. They set the tone for your entire team and therefore your entire work experience. Choose wisely!
- Attorney. Your attorney will certainly help you set up your business, but he or she will also help you wade through letters of intent and purchase and sale agreements.
- Lender or mortgage broker. Find a lender or broker who understands the business of property investing. Not only will they lend you money, but they will also provide you with leads on other properties that are ripe for sale.
- Investors. By communicating your goals and doing the work of building your team, you should find several sources of equity who will entertain investing in rental property
- Contractor/Rehab specialist. Contractors see things you and I don’t when it comes to walking a property. Before I sign any deal, I have a contractor perform a detailed inspection and file a report of all critical and noncritical repairs.
4. OTHER TEAM MEMBERS
From time to time, you may find you need these professionals to assist with projects that arise when either considering a property or once you own it. As with the professionals on the previous list, these team members will come to you through referrals.
- Accountant. Your accountant will help you not only with your own business finances, but also help you put together profit-andloss projections for the properties you are considering.
- Appraiser. An appraiser is an important team member and should be a person who specializes in both your market and the types of properties you are targeting. This professional will help you determine the appraised value of property before and after the sale.
- Architect. Some properties need more than just a coat of paint and the bushes trimmed to get them into shape. An architect can help you with new design ideas and renovations to increase curb appeal and operations performance.
- Insurance agent. The insurance agent will help you place the proper protections when you own the property. Having the right coverage for the right price will be necessary if you acquire property
- Property tax consultant. Property taxes are realities in this business and property tax consultants can ensure that your taxes are being assessed fairly and accurately
- Income tax consultant. The tax laws are complicated and it is always good to have the advice of someone whose job it is to keep up with tax law.
- Estate planner. As your real estate assets grow, an estate planner can help you shelter and dispose of them in the event of illness or death.
- Environmental company/industrial hygienist. If you suspect mold, asbestos, or any other environmental hazard, you’ll need one of these to help you through the process of testing and removal if necessary.
- Surveyor. As you are rehabilitating a property, you may need the services of a surveyor to assess boundary lines, elevations, and other such matters.
- Structural engineer. Your contractor may find a problem that jeopardizes the structural integrity of the building. Call in a structural engineer, who will analyze the problem and recommend a strategy to repair the building.
Teams are just that: People who work together to get the job done. They should be on your side and have the mentality that when you are successful, they are successful. Keep searching until you find people whose goals and business methods gel with your own.
Possibly related posts: (automatically generated)
Partners - A Good Thing or a Bad Idea
- Working with a Buyer's Agent
- Corporate and Investment Groups
- Letter of Intent
- Thirty-two Techniques for Acquiring Real Estate When You Don’t Have Cash (13-16)
- Begin with Senior Loan Officers
- You Have to Be a Seasoned Negotiator and Businessperson, Invest Myth
- Thirty-two Techniques For Acquiring Real Estate When You Don’t Have Cash (29-32)
- How to choose Real Estate Agent when Private Property Buying is a bad idea
- Thirty-two Techniques For Acquiring Real Estate When You Don’t Have Cash (20-21)
- You Have to Know Somebody to Get Going in This Business, Invest Myth
Topics: Agent, Appraisal, Broker, Company, Contract, Development, Investment, Job, Market, Property, Rental, Sale |
July 28th, 2008 at 6:45 am
The AR MLS service is an Association of real estate Brokers agents and professionals who agree to share the CLAY, Arkansas listings with each other. … Internet Letting Agent
July 28th, 2008 at 10:38 pm
At one time I was using one of the ” free” forum software’s out their and thought it was nice until I wanted to make changes to the forum etc. … Investment Opportunities
September 5th, 2008 at 5:51 pm
Although most of the smaller provinces are also showing declining house price inflation, it is noticeable that their markets, generally speaking, were a little slower in getting going at the beginning of the property boom, but have held up for longer than the major provinces. … Vast International Market