We’re often inclined to think that we can handle it all in our real estate businesses, especially in the early phases of the business. There are 7 key people that you need to have on your team… I realize it’s a balancing act because you’re often faced with balancing the financial aspects of a new business with finding the right people. However, the cost of NOT getting the right advice can be crippling.

My very first partnership was with a long time friend. We’d attended some workshops and trainings, asked an accountant and attorney we knew what we should set up for the business entity, and ultimately set up a basic corporation with an s-election. We weren’t real clear on what we needed it for and were primarily looking at the tax beneifts. Well, from a tax perspective, we did alright, I suppose. But, what we didn’t factor in was what was going to happen when we inevitably wanted to go in different directions.

We were warned by a good friend and mentor early on. He said, “Partnerships will only survive as long as both people need each other. Once either one is able to stand on his/her own, the partnership no longer works.” And we, of course, said, “Yeah, but we’re different.”

Folks, I assure you that you are not different. It’s human dynamics. Ultimately, people grow and change and want for different things. This is actually a good thing when it’s done the right way. It’s can be devastating when you don’t realize this up front and put the appropriate checks and balances in place and plug the potential holes before they come back to hurt you. At the end of the day, the corporation cost us $99 to set up and tens of thousands of dollars and 2 – almost 3 – years to put it to bed (mostly, anyway).

So, in reality, we could have spent $1000 or so to have it set up properly and saved nearly $50,000, two years and a whole bunch of headaches, and possibly a friendship. This is but one story among thousands and thousands out there from investors all over the country. In another post, I’ll share with you some of the pitfalls of a joint venture and how it cost me $90,000!

But for now… let’s talk about some of the people you should have on your team as you get started and as you grow your business. Keep in mind, also, that you will eventually need to fire different team members as you outgrow them. You’ll need more advanced advisors as you grow different arms of your business and begin to take it to different levels. It’s a good idea to save 1-3% of all your profits in an “advisor” account so that as you need better people, you have the money to buy the best advice.

Now… on with the team! Here are 5 key team members that you simply must have if you’re going to be successful in real estate.

1. Real Estate Attorney
   It doesn’t matter if you typically use a title company or an attorney for closings, but you are going to want to have an attorney on your team to review documents, assist with legal questions and to advise you on some of the “creative” deals that you will inevitably put together. Nine times out of ten, there is a legal way to do what you’re looking to do. It may simply take some wording from an attorney or they may catch something you didn’t think of. Warning: If there is NOT a legal way around what you’re trying to do, walk away from the deal or restructure it. It’s simply not worth it.
2. Asset Protection Attorney
   Find an attorney that you are comfortable with and that will take the time to sit with you to go over your business plan and goals and will help you determine what the best legal structure is for your business. There are many variations to structuring your business and you’ll want to make sure your attorney has all the information to advise you properly.
3. Accountant
   Your accountant and your attorney should probably have a conversation at some point. So many times, we get stuck between a rock and a hard place. One will tell you absolutely that you MUST have an LLC and the other will tell you that you definitely want an S-Corporation. They are both correct depending on your circumstances. Your accountant’s job is to limit the amount of tax that you have to pay and the attorney is to keep you out of jail! There is a happy medium between the two that often involves a combination of several entities, so it’s important to have it set up properly for maximum liability and tax protection.
4. Lender (or Mortgage Broker) – MORE THAN ONE
   Lending guidelines and programs change daily. You’ll want to have a number of people you can shop deals out to because they will have different relationships and be able to do different things. Some lenders specialize in hard equity loans while others specialize in first time home buyers. Some have subprime programs and others have A-paper only. Know where your lenders excel and where they can best fit. Also, make sure they keep you up to date on what programs are available and what programs are going away (i.e. 100%, no doc, investor loans!)
5. Property Inspector
   The company that we use is Pillar to Post. They are very thorough and many of the inspectors invest in real estate themselves, so they know what’s important to you and won’t waste your time on broken face plates and outdated kitchens! They’ll give you the nuts and bolts and the big money items. Plus, if you simply let the inspector know that you’d like to follow them around to learn, they are generally pretty good about it. Be careful not to get in the way, but ask any questions that you might have. Their website is www.PillartoPost.com. It’s a good idea to ask them up front if it would be okay for them to kind of talk through the inspection with you and to let you walk with them to learn.

These are only 5 people that you should start looking to put on your team. There are dozens more that will make your life easier and allow you to spend your time finding deals and their time doing what they do best. In future posts, we’ll go over some of the other people you should look to add to your team. But, for now… interview 3 people in each of the 5 categories above and start building your foundation, knowing that your team is constantly growing and evolving as is your real estate business.

I just urge you to please use diligence and caution early on ESPECIALLY if you are getting into business with partners, friends or family or doing joint ventures on a per project basis. The old adage holds true: Pay now or pay later!