If you have the right real estate investing team members in your corner, your rental properties should run like a well-oiled machine.
There are several professionals you need to have available when you own rental properties. Fill out this roster with people who have extensive experience dealing with investors in your local market.
Here’s a list of nine of the most important professionals for real estate investors to seek out before buying their first rental properties.
1. Real estate agent
These days, it’s easier than ever to do your own property search. But a great real estate agent is still one of the most important real estate investing team members.
A real estate agent with lots of investment experience in your local market can help you decide how much to offer for a property and can point out things that aren’t in the listing.
For example, I recently had my eye on a single-family home, but thanks to some odd boundaries, it was in an undesirable school district. By looking just a few blocks away, we were able to find one that was more appealing to young families.
In addition, your real estate agent can bring you off-market deals they hear about and can save you time in the negotiating and purchasing process.
Perhaps most importantly, your real estate agent can help you find the other professionals on this list.
2. Property manager
For most investors, self-management of rental properties isn't desirable. It’s not that you can’t do it. In fact, you’re never going to find a property manager who cares as much about your properties as you do, so it’s entirely possible that you could do a better job than the professionals.
Here's why it's still a good idea to hire a property manager. The issue is the opportunity cost of self-management. Under normal circumstances, you can expect to spend at least a few hours per month managing each of your properties -- not including the time you spend driving around.
That’s when things are going smoothly. Scenarios like evictions and emergency repairs can be extremely time-consuming. In most cases, even if you feel capable of managing your own properties, it’s well worth giving up 8% to 10% of your rental income to not worry about day-to-day operations.
If you don’t know any reputable property managers, your real estate agent or someone else on your team can point you in the right direction.
3. Mortgage professional
Many investors have a mortgage broker who does the legwork of shopping for investment property loans on their behalf. Others have a go-to contact at a specific lender that they love.
I use the latter approach. I don’t mind doing the shopping myself, and I find that I get fantastic service and extremely prompt attention as a repeat customer. That said, there’s nothing wrong with the mortgage broker approach if you want to decrease your workload.
Whichever path you choose, have someone you trust help you through the loan process.
4. Real estate attorney
Hopefully, you won’t need to use a real estate attorney too often in the course of managing your rental properties. But it’s still a smart idea to have one in your corner.
An investor-experienced real estate attorney can be worth their weight in gold during an eviction or if you get sued by a tenant. Your real estate agent can be a great source for an attorney, as most have someone they’ve worked with many times before.
5. Insurance agent
Most property/casualty insurers can write insurance policies on investment properties, but you want one that has lots of experience dealing with investors and their lenders.
For example, many asset-based lenders have specific and unusual requirements when it comes to insurance. Plus, you’ll want an insurer who can deal with your mortgage servicer.
In addition, many insurers give discounts to customers with multiple policies. Your current homeowners insurance agent is a good place to start, assuming you're satisfied with their service, but it’s important to ask about their investor-specific experience.
6. Home inspector
You need an inspector, even if you’ve agreed to buy a property as-is. If the seller isn’t willing to make any repairs, you still need to know where the problem areas are and the severity of any damage
Having a great inspector can make the difference between knowing exactly what to expect when you close on a property and effectively taking a gamble. Many inspectors also give preferential rates to investors who use them frequently.
As a real estate investor, I can generally estimate the value of a potential rental property based on the amount of rental income it generates and its overall condition. However, it’s still important to have an appraiser you can rely on.
Not only will an appraiser give you a more accurate assessment of how much a property is worth, but they can also give you advice on the most cost-effective ways to add value to the property.
Having an appraiser who's used to working with investors can be especially important if the property you’re considering is vacant, as you’ll want a professional rent appraisal.
Investors tend to assume that properties are worth more than they actually are and will rent for more than they actually will. An appraiser can give you an impartial assessment that can help you form realistic expectations.
Most real estate investors don’t do their own taxes. While real estate is a tax-advantaged investment, rental property taxes can be complicated, especially if you own several properties.
For example, do you know how to accurately calculate depreciation or how to report it to the IRS? Did you know that you deduct mortgage interest on rental properties in a different manner than the interest on your personal residence mortgage?
A Certified Public Accountant, or CPA, can help keep your rental income and expenses in order and calculate your deductions.
Even if you buy your investment properties in rent-ready condition, at some point you’ll need to fix something. A water heater will burst, the roof will spring a leak, or your heater will stop pumping out hot air. In situations like these, you need a general contractor or handyman that not only does quality work, but also shows up quickly and charges reasonable rates.
Your property manager can be a great source for this. If you don't have a property manager, try asking your real estate agent who they use.
You’re only as good as the real estate investing team around you
Regardless of how good you are at being a real estate investor, your success or failure depends just as much on the people on this list as it does on you. You can get a great deal on a property, but if you don’t know how to market it to tenants, it could sit vacant for months. If it takes weeks for problems to get fixed, your tenants could get frustrated and start moving out.
It’s difficult to overstate the importance of building your team. You’re only as good as the people you trust your rental property business to, so be sure to do your homework and build a team of all-stars.