Fuel Your Investing Business with a Strong Power Team

In this first of a two-part series, Jordan Taylor takes a look at why you need a Power Team and how to build one.

By Jordan Taylow

One of the joys of watching children grow up is seeing them learn to be independent. Certainly independence and self-reliance are qualities to be admired, but when it comes to real estate investing, interdependence on the right people can give your business a tremendous boost. The best way to create productive interdependence is to build a Power Team.

A strong Power Team is made up of people to whom you can delegate tasks when your time can be better spent elsewhere. It's also your brain trust—the people you can rely on for advice and guidance. You don't have to formally invite people to be on your Power Team; simply cultivate a relationship that benefits you both.

Don't do it yourself

It's common for new real estate investors to want to do everything themselves, but it isn't practical or productive. Sure, you can save some immediate cash by doing a lot of the painting, cleaning, and fixing-up of your properties yourself, but compare the savings to the cost of lost opportunities. You might save a few hundred dollars by doing the work yourself, but how much could you have made if you had spent that time finding and putting together another investment? And you can probably find plenty of deals on your own, but how many more could you do if you had other people looking for potential investments for you?

Let's take a look at some of the people who could be valuable members of your Power Team by doing things that are important but that don't directly generate revenue for you.

Realtor/Real Estate Broker or Agent. When you're the buyer, Realtors work for you for free because they're paid by the seller. Let them search for properties, make offers, and help you negotiate deals. If you're investing in different types of real estate or in different areas, you may want to have different Realtors who specialize in those areas on your team.

Title Company. Title companies handle closings, conduct title searches, and provide title insurance. In most states, sellers typically pay for title insurance, so the services of a title company are free to you as the buyer. Even though you may know how to conduct a title search, a title company can usually do it more efficiently—and they're going to have to do it anyway before issuing title insurance. Title companies may also be a good source of leads for deals; they know when transactions fail to close at the last minute and may be able to refer the stranded buyer or seller to you.

Bird Dogs. These are the people who are out in the areas where you want to invest that can alert you to potential deals. Bird dogs may be lawn care providers, pizza delivery people, utility workers, mail carriers, and other service workers who can tell you about possible opportunities they see in the neighborhoods where they are working. Even your own service providers, such as your barber or hairdresser, nail tech, or staffers at places you go regularly can be bird dogs for you. Just give them some guidelines so they know what you're looking for. Many investors pay their bird dogs a referral fee if the deal closes; however, in some states, such referral fees are considered real estate commissions and can only be paid to licensed real estate agents and brokers. Check with a real estate attorney to verify the laws in your state before offering compensation to your bird dogs.

Contractors, Handypersons, and Craftspeople. If you're going to do rehabs or hold and manage rental properties, you need people to do the actual physical labor of repair and maintenance. When it comes to contractors, a self-employed solo operator or a very small business will likely give you better prices and be more flexible to work with than a bigger company. If you have rental properties that need maintenance, a good handyman is a must. And if you're going to do rehabs, you'll need a team that includes a painter, plumber, electrician, drywall installer, and heat and air-conditioning technician.

Property Managers. Even if you prefer to manage your own units, build a relationship with property managers. They're a great source of advice as you're learning the business and you may eventually want to turn your properties over to one of them. Also, property managers often know when good investments are coming on the market.

These are the people who are happy to do things for you because they benefit when you're doing well. In the second part of this series, we'll take a look at the brain trust and financial side of your Power Team—the people who have the knowledge and money to help you reach your goals.

---

Jordan Taylor is the editor of Cash Flow Generator® newsletter.