HAVE YOU EVERY THOUGHT OF WHAT MAKES SOMEONE successful? I cannot speak for other fields, but from my experience, the difference seems to be nominal in real estate. That small difference can be found in the professionals used by a real estate investor, specifically real estate agents, attorneys, accountants and bankers.
Hands down, the most important person to know if you want to be a successful real estate investor is a good real estate agent. A seasoned real estate agent will most likely invest in real estate themselves, but no agent can buy all the deals they come across. One of the investors I do business with says he gets over a dozen calls a day from agents. He also goes through reams of paper from faxed and e-mailed listings. He says that even though he peruses a majority of the deals, the deals that come from his trusted real estate agents get moved to the front of the line. If you can deliver on the terms you promise consistently when purchasing property, more deals will come across your desk because real estate agents will be able to count on you and vise versa. But what happens if issues come up with the purchase, who do you turn to?
When you need one, a good attorney is worth the cost. Another investor I work with told me about a purchase transaction that was held up for three years because the seller was less than honest. The seller had claimed there were no environmental issues with the property that he knew about.
Once the buyer did his environmental survey, he found a leaky gas tank from a gas station that used to be on the property. The seller had done an environmental survey as well and knew about the tank, but did not disclose the information. Long story short, when the buyer tried to back out of the deal, the seller threatened to sue. The buyer sued him first and the litigation took several years to resolve. He ultimately won and the seller had to pay for his attorney fees, clean up costs and had to sell him the property for the price that had been agreed upon three years earlier. The property was worth 35 percent more, making the deal a windfall. In the end, my borrower said there was no substitution for a good attorney or legal team.
Finding the deal and protecting yourself are important, but what happens at the end of the year when you have to pay Uncle Sam? When tax season comes around it is important to have a knowledgeable accountant. Without a doubt, a good accountant is worth their weight in gold. An experienced accountant can legitimately save a real estate investor thousands of dollars a year. A couple of days ago I contacted one of my borrowers, who’s a CPA, to get some documentation on a loan. He said that he was in the middle of reading the changes to the IRS code to see if there were any large changes that would affect his clients. Now that is something you want hear when calling a CPA. It is hard to put a price on a good experienced accountant.
A successful real estate investor depends on many other people such as property managers, appraisers, inspectors, contractors and insurance agents; however, the person they speak to after the real estate agent is their banker. Leverage is key in real estate and the best way to attain it is with financing. When you need to know how much money you can borrower it is important to have a banker who can answer your questions accurately. Financing more often than not, will make or break a deal. All successful real estate investors have a banker they can count on.
Although many people will help a real estate investor, it is ultimately up to the investor to do the deal. Many successful real estate investors depend on the expertise of professionals to help them make educated decisions. If you are thinking about starting in real estate investing, make sure you have a good team in place that will help you make the best choices.
MIKE HEAYN is a Washington Mutual multi-family loan consultant. He (310) 428-1342, or e-mailed at
Originally published in the Santa Monica Daily Press print edition on January 30, 2008. Read the original PDF.