by Theresa Bradley-Banta
I was just interviewed over at 1290 WLBY Talk Radio for the Lucy Ann Lance Business Insider Show (follow link to listen to the interview).
Lucy Ann asked, “…you really point out that team is number one even for beginners. Who are you talking about there?” It was such a great question that I thought I’d expand on my answer here on my blog.
Building your multifamily real estate investing team is not as hard as you may think
It’s easy for beginning investors to be intimidated by the thought of hiring a great team. Not to worry. You do not have to post ads on Craig’s list, conduct interviews and put someone on your payroll. You can build a great team by networking.
Get warm referrals by networking with your multifamily real estate investing contacts
The first thing you’ve got to do is get in action by connecting with people and specialists in the multifamily industry such as:
- Commercial real estate brokers.
- Apartment building managers.
- Local title company or real estate attorneys and
- A multifamily mentor.
You will not build a team by reading books or by poking around online.
Here are some tips for finding and hiring your team:
Build your core multifamily investing team first
I built the majority of my multifamily investing team after I was in contract on my very first apartment building. That might surprise you. But up until I was actually in contract I was busy interviewing commercial property brokers, interviewing apartment building property management companies and looking at properties.
Your real estate mentor, commercial broker and property management company are the three most important members of your team. Most of my referrals for prospective team members came from these three key individuals.
Network only within the multifamily investing industry
My single-family Realtor friends and acquaintances simply did not have a network that included contractors, renovators and other specialists who had experience working on apartment buildings. Some may but in my experience most don’t. When you think about it, it makes sense doesn’t it? In order to include multifamily investors, rehabbers, management companies and contractors within their network a Realtor would have to make a concerted effort to connect with those individuals. Most Realtors generally do not have a need to do so.
Start asking for referrals
After I found several commercial brokers who I both liked and thought I could work well with, I began having conversations about who they thought were the very best specialists in town. I also asked for referrals from my property management company and from several multifamily mentors that I worked with.
In a very short time I was referred to excellent companies and individuals such as:
- Commercial roofing companies: My broker had three roofing company referrals for me. Each company met with me at the property and gave me bids on roof repairs. I used those bids to negotiate a seller credit for roof repairs. After we closed on the property I hired one of the companies to install a new roofing system—on the seller’s dime.
- Structural engineer and real estate inspection service companies: Always, always, always inspect your property before you buy it. Again, my broker gave me several referrals. I met each at the property while still in contract and got bids on the inspection costs for the property. Then I hired both a structural engineer and a general apartment building inspector to inspect the property. Again, this was done while in contract.
- Concrete and asphalt repair specialists: My mentor had three concrete repair specialist referrals for me. I met all three companies at the property and had them bid on the necessary repairs. I negotiated a seller credit for repairs on these items too. After we closed on the apartment building I hired one of the three companies to install new sidewalks and asphalt driveways. This team of contractors also helped me turn an ugly and underutilized loading only zone into a courtyard with trees, flowers and stamped concrete.
- Other specialists: Through my network I was able to get introductions to repair and installation contractors specializing in areas such as; carpet and tile; wood flooring; boilers; sewer; plumbing; painting; appliances; signage; and lighting and electric. All of these contractors worked out well. Today I think of these specialists as part of my team and I’m able to pass their names along to my consulting and mentoring clients where appropriate—as warm referrals!
- General multifamily specialists such as: Commercial title companies, 1031 exchangers and commercial lenders.
It’s important to note the following:
All of these contractors had experience in the multifamily real estate industry
Not one of these contractors came from the single-family side of real estate investing. This is important for you to know. It’s extremely difficult for single-family specialists to move into the multifamily industry. Single-family renovators and repair people have a tendency to over-renovate when working on apartment buildings. This can break your budget almost overnight. And they typically do not have experience with major apartment building systems such as roofs, elevators, cooling systems and boilers. You can read more about this topic throughout my book Invest In Apartment Buildings—it is critical to your success that you know and understand the importance of hiring team members with experience in the multifamily arena.