17 May The Four Primary Relationships a Landlord Needs
It’s been said that the size of your network is the size of your net worth. While it’s not a perfect correlation, let’s take a deeper dive on the key relationships a landlord needs.
1.) Realtor. Sure, you can find a deal on your own. Yet you can find a lot more deals with a skilled Realtor. Not only that, a Realtor knows about real estate laws, local customs, and market conditions. A great Realtor is a skilled negotiator who might be able to sweeten a deal. A Realtor is like leverage for you, as they can spend time finding and researching potential properties for you. In many cases, their commission is paid by the seller. Even if their commission isn’t paid by the seller, your Realtor will produce far more value for you than what you pay them. If you believe that Realtors only find properties on the Multiple Listing Service (MLS), you’d be incorrect. Realtors have relationships with real estate investors, other real estate agents, and motivated sellers. There are landlords who don’t want their apartment building publicly listed for sale, so you might be introduced to an off-market opportunity. When you hire a Realtor, you gain access to their network. What if their contractor can get the job done faster and for less money? What if their insurance agent can save you $2,000 a year while increasing your coverage?
2.) Remodeling contractor. A reliable, reasonably-priced, licensed contractor is worth their weight in gold. A bad contractor can cost you thousands of dollars with shoddy work or with unfinished projects that prevent you from renting your units. A great contractor shows up when they say they will. They give you an estimate – whether it be a fixed price or at least tell you their hourly rate – before they start work. A great contractor advises and consults you. For example, I asked a plumber to quote me on the cost of demolishing an old-looking tub and putting in a new one. He said it would be $2,000, but then he recommended that I consider a bathtub refinisher who would put white epoxy over the existing tub. The bathtub refinisher did the job for $450, and the tub looks like new. So the plumber lost out on a $2,000 job but earned my trust and dozens of subsequent jobs. A great contractor also stands by their work. If something isn’t right, they fix it or do what it takes to resolve the situation.
3.) Mortgage loan originator. Money doesn’t always cost the same. Some people pay a lot more for their money than others. A great mortgage broker or banker helps you fund the acquisition and possibly even the renovation costs. They get you the lowest interest rate, the loan term that’s best, and charge reasonable points and fees. They may search for grants or tell you about specialized loans. For example, a local lender learned about a 2-percent interest rate loan for multi-unit apartment buildings in a particular zip code. The loan was for landlords looking to buy apartments in a blighted area in need of outside investment.
4.) Property manager. While you may self-manage, you can’t scale your business without the help of a property manager. Some landlords are reluctant to hire a property manager due to the fees or commission they charge. A great property manager will make you more money than what you pay them. For instance, they may raise rents above what you’re charging. They may add a coin-op laundry room. They may reduce vacancy by putting together a wait-list for your units. A great property manager may advise you on what maintenance to focus on. A skilled manager may reduce vacancy by getting tenants to stay longer. They may tell you how to avoid fines from the local municipality. They may charge extra rent to certain tenants for on-site storage or garage spaces. Their handyman may be less expensive than your contractor. Your property manager takes the calls day and night and also when you’re on vacation. The peace of mind (and restful sleep) may be worth hiring someone. There’s nothing wrong with self-management, yet you should consider getting help at some point. Also, a great manager may know other landlords who are looking to sell, so you night snag an off-market deal because of the relationship.
Other valuable relationships include:
1.) Accountant
2.) Attorney
3.) Insurance agent
4.) Handyman
5.) Roofer
6.) Plumber
7.) Electrician
8.) Landscaper
9.) Banker
10.) Title agent
11.) Painter
12.) Code enforcement official
13) Appraiser
14.) Insurance public adjustor
15.) Glass repair
Check out my book How to Become a Wealthy Real Estate Investor: 101 Things You Need to Know Right Now. It is available at https://tinyurl.com/taidesa.
Tai DeSa is a graduate of The Wharton School of the University of Pennsylvania. He became a full-time real estate investor in 2004 after serving in the U.S. Navy. Tai made colossal mistakes in investing (and learned some things along the way). Tai has coached hundreds of entrepreneurs, real estate investors, and real estate agents on how to increase their income and net worth. He has helped hundreds of homeowners avoid foreclosure through successful short sales. Check out Tai’s books on Amazon.com. Tai may be available for coaching and speaking engagements on a variety of real estate topics. Send an email to tai@investandtransform.com.
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