Every real estate investor needs a team of highly competent, motivated individuals and companies that they can depend on. The team needs to understand the mission and vision of the real estate company so that the team can execute on the business plan. The team needs to be focused. The team needs to dig up deals, evaluate deals, offer on or reject deals, complete due diligence on the property, and close on the property.
Investment Sales Brokers
Investment Sales Brokers are an important part of obtaining deal flow. Investment Sales Brokers work for commercial real estate companies that are in the business of generating property leads, cultivating relationships with property owners and property buyers, negotiating terms between buyers and sellers, and closing transactions.
It is important that Investment Sales Brokers know what types of properties you are looking for, what locations you want to invest in, and what size deals you want to invest in. Build relationships with various sales brokers specializing in different property types and in different geographic locations.
Leasing Brokers are real estate professionals that are in the market to represent Landlords who own commercial real estate space and Tenants who occupy commercial real estate space. A leasing broker who represents the Landlord markets the space available in the Landlord’s properties and finds suitable tenants to occupy the space. A leasing broker who represents the Tenant determines the needs of the Tenant and finds space available in the market that can be leased from a Landlord.
Leasing Brokers will be an important part of your team if you own property or if you are a user of commercial real estate. Leasing brokers generally know their market well and know which Landlords have space to lease and which Tenants are in the market for space. Leasing Brokers know the market rental rates and terms that will get a deal done.
Mortgage Brokers are financial intermediaries that assist owners of real estate with financing their properties through various financial institutions. Mortgage Brokers work with banks, credit unions, life insurance companies, pension funds, Wall Street investment banks, debt funds, and private lenders.
Mortgage Brokers are instrumental in arranging the optimal financing available in the market. Mortgage Brokers are constantly talking to lenders to see what terms are available in the market. They also know the timelines to close acquisition financing and refinancing deals. Mortgage Brokers also offer advice about which lenders are generally the most reliable.
Real Estate Lenders
Lenders are organizations or individuals that lend money to property owners. Lenders secure their loans through Mortgages and Trust Deeds. Lenders can be banks, credit unions, life insurance companies, pension funds, Wall Street investment banks, debts funds, and private lenders.
Lenders should also be thought of as part of the team. Whether financing is arranged through Mortgage Broker or directly with a lender, it is important to note that lenders typically provide the majority of the
capital needed for acquire a property and provide good loan-to-value ratios (up to 80% LTV) on refinances.
Property Managers are important to the success of your property operations. This individual or organization is charged with being the face of the ownership with the tenants and vendors. Good property managers can make your real estate ownership experience amazing. However, bad property managers can make your real estate ownership experience painful. It is important to interview multiple candidates and to give them tasks to complete. Do not give up complete control of the process. Ensure that you have a say in how and why the property manager is spending money in the way that they are. Oversight is paramount to success for you as an owner.
3rd Party Providers
Having a list of go to firms that can complete reports and reviews for you is extremely helpful. Often times, it is good to ask the lenders that you plan on working with what their process is, who they accept for 3rd parties, and how quickly the reports need to be delivered. There are many firms that offer 3rd party reports and opinions, but get to know the best, as they often times deal with lenders regularly, and know what will be acceptable to lenders and what will not be acceptable to lenders. A list of some common 3rd party providers are shown below:
- Phase I & Phase II Environmental Engineers
- Structural Engineers
- Mechanical Engineers
- Seismic Engineers
- Title & Escrow
Build up a good team. Know that you cannot do it all and that you are going to have to trust good individuals and companies that are specialists in their particular field. In a way, you must become the CEO of your own property and investment strategy. Have good people around you that you can rely on, and you will be able to accomplish much more with your team than you would have been able to otherwise.
Until next time, let’s continue growing our passive cash flow and net worth together!