If you were lucky enough to go to the Best Ever Conference 2021, you may have watched the Real Estate InvestHER presentation by Liz Faircloth. During the presentation, Faircloth covered the best insights into how to build a team for real estate investing. It was an amazing look at just how easy it can be to invest in real estate as long as you do everything the right way. Through four simple steps, you can take control of your financial future, build your nest egg and create a strong real estate team.
How to Build a Real Estate Team
On average, commercial properties generate an annual return of 6 to 12 percent. If you invested in a $1 million property, then you can expect returns of $60,000 to $120,000 per year. This rate varies based on the area, but it is much higher than the average return of 1 to 4 percent that you can get from a single-family home.
In order to achieve a great return from commercial real estate investing, you need help. Buying properties, collecting rent and analyzing balance sheets take time and effort. To make sure your real estate empire is a success, you need to build a strong team to support your investing decisions.
1. Map Out Where You Want to Go
Where do you plan on going with your real estate investments? Are you trying to increase your annual returns? Do you want a property that appreciates a lot?
Before you can build a team or make an investment, you have to know what you want. You should sit down and create a list of short-term and long-term goals. Basically, you need to create a vision and mission statement. Once you have a clear idea of where you are going, you can figure out the best steps for getting there. You can also look at the things that are currently holding you back and change them.
In general, you should always use SMART goals for your business and your future team.
- Specific: You have to know what you want, or you will not be able to achieve it. Your goal should include what you want to accomplish and why you want to accomplish it.
- Measurable: If your goal is to get a return of 9 percent, you can easily measure your results and see if you were successful. The best goals can be easily measured so that you can know if you are successful or not.
- Achievable: While deciding to become the leading investor in the world sounds great, it probably is not an achievable goal. If a goal is impossible to do, you will become disillusioned. Instead, you should focus on making goals that are realistic and attainable.
- Relevant: Good goals are relevant to what you are doing. They are also achievable based on your current resources and abilities.
- Time: You need to make time-based goals because deadlines are great motivators. A deadline gives you something to work toward.
2. Take a Personal Inventory
Next, you need to take a personal inventory of where you are at. Before you can figure out how to build a team, you need to consider your resources. What kind of credit do you have? Do your assets outweigh your liabilities? In order to hire someone, you should initially figure out what you can afford.
You should also consider your personal traits. Your personality, experience, skills and leadership traits determine whether you can successfully hire and train employees or not. What do you bring to the table?
This personal inventory is also useful because it is a chance to learn more about yourself. For example, you can always take a leadership class if you need to become a better leader. If you lack accounting skills, you can make sure to build a team that includes an accountant.
Ideally, you should spend at least half a day taking a deep look at your personal inventory. Before you hire someone, you need to know which areas you excel at and which areas need work. Then, you should pick team members who balance out your strengths and weaknesses.
3. Determine Who You Need to Meet Your Goals
Now that you know what you excel at, you can focus on bringing in a team that helps you achieve your goals. You should figure out which roles you want to fill and how you fit into the team. This means you have to be realistic about your strengths, personality traits and experiences.
While every team is different, the following is an example of what your team structure could look like for commercial real estate investing.
- The Hunter: This person is in charge of acquisitions and looking for properties.
- The Brains: The brains of your operation will handle planning.
- The Money: This individual will take care of funding your projects.
- The Hammer: The hammer is the person in charge of execution. They handle all of the negotiations.
4. Focus on Gaining Alignment and Leveraging Diversity
Two of the biggest mistakes investors make when building a team involve alignment and diversity. Your organization has a certain level of entrepreneurial spirit. Additionally, your employees are expected to meet certain expectations and goals. Because of this, you have to hire someone who is aligned with your values.
Someone may look great on paper, but they will not stay long if they are not aligned with your organization. When someone does not fit in with the organization’s culture, they tend to quit or get fired right away. Instead of wasting your time and resources on the wrong applicants, look for alignment as you build your team.
You also need to build a diverse team because diverse personalities and skills provide balance. As you interview people, consider their experiences, levels of risk tolerance and personalities. Then, you should try to hire team members who give your team diverse points of view.
It is almost impossible to understand someone’s complex personality and background in a single interview. Fortunately, there is an easy tool you can use instead. Personality assessments are a quick, simple way to understand an applicant’s personality. As you read through the personality results, you should avoid hiring people who are just like you. Many managers make this mistake, and it will reduce your team diversity if you are not careful.
Learning how to build a team is important if you want to be successful. As your commercial investments grow, you will not be able to manage everything on your own. Through a strong team, you can become better at commercial real estate investing and increase your profitability.
Disclaimer: The views and opinions expressed in this blog post are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action.