It's popular in writing business content to use the "toolbox" concept for things we use to conduct or market our business. You'll see, put this real estate valuation tool into your toolbox to get to the right value of your next investment purchase. Or, your marketing toolbox isn't complete without a Facebook Business Page.
I choose a different container when it comes to the big picture of my real estate investment business when it comes to management, marketing and sales. Call it my real estate investing "briefcase." When I open my briefcase, I want to find all of the resources I need to operate my business. Even more, I want to find what I need to supercharge the referrals that are the best source of business, no matter which investing niche I'm working in.
It's probably not the best approach to refer to your accountant or a real estate agent as a "tool" anyway. Let's take a look at the resources in my business briefcase and how each is of value and important to my success.
Real Estate Agents
Yes, even though I don't buy at retail often, real estate agents are quite important to several of my investment strategies. As far as referrals, there are times when a distressed homeowner wants to list their home for sale but the numbers don't work. The real estate professional can send them my way to see if I can be of help, perhaps with a short sale.
I also have an early warning system made up of real estate agents who do BPOs, Broker Price Opinions. These come very early in the foreclosure process, and getting a heads-up to a nice property well before the bank puts it on the market can be of real value. Every now and then I can even bid against the bank and pick it up at auction.
Real estate agents can deliver a rental property bargain now and then, so I never tell them not to send what they consider good deal listings my way.
While this team member may not ever send me business, they will certainly save me huge sums of money over the long haul through tax planning and legal tax avoidance. I rely heavily on my accountant for advice and trust them to keep me on the edge but out of trouble tax wise.
Most of the time, not needing my attorney is a good thing. However, sometimes it's good to have them take a look at a new lease I'm putting into use to see if I am jumping through all of the legal hoops properly. You want to do the due diligence to have a good attorney on your team before you need them.
Sure, you want to know a great mortgage broker if you're seeking funding for rental properties. But, you also may want an aggressive broker if you're selling properties, especially at retail. Helping your buyer to get a great mortgage can get you a higher price at the closing table.
While some mortgage brokers dabble in this niche, the specialty transaction lenders do only short term or specialty real estate investor lending. Unless you're already cash fat, you're going to need this type of funding for wholesaling and fix and flip. It's not a cheap source of funds, but without it fewer deals would get done.
Title Company or Title Closer
Title companies have the information, or can easily get it, about what's happening in relation to the ownership of real property. While they may not be able or want to do free property searches for you, often you can ask a question and get an answer that will help you in making decisions. An example was when I asked a title closer if there were any problems with a particular condominium project.
Based on their recent title searches I learned that the ratio of rentals to owner occupants was too high for Fannie Mae or Freddie Mac loan guarantees. I passed on the deal I was considering, as selling it would have been tough, and rental competition was too great.
Of course, if you're doing any type of fix and flip or fix to hold investing, you want some strong contractor relationships. The right contractors can make you a lot of money. They can at times refer business to you as well. I had a contractor send me a deal where the homeowner found they needed a new roof and couldn't afford it. I got a good deal on the home, used the contractor to replace the roof, and it's a great cash flow rental property.
All of these are important and valuable relationships that I keep in my real estate investment briefcase.