If you watch sports, you will often times see coaches using X’s and O’s to draw up the plays they want their players to execute. After a successful play, television commentators will take to the telestrator to diagram out why a particular play worked and give credit to the coach who drew up it up. Unquestionably, making the optimal tactical moves in sports and real estate investing is important, but coaches and real estate investors alike need to be cautious about falling too much in love with “The Plan” at the expense of neglecting another vital component to success– the team.
Regardless of which real estate investment model is right for you, you will not be able to execute on your own. If you attempt to, you will only be able to operate at a very small scale or slow speed over the long term.
The most successful coaches and real estate investors are the ones who are able to attract and recruit the best teams. It’s less about the X’s and the O’s and more about the Jane’s and the Joe’s, that is, the players on the team. So how do you recruit your team?
Approach and Attitude
The best athletic recruiters are those that can best SELL their program. As a real estate investor, it may seem counterintuitive to have to sell your contractors, deal finders, property managers, lenders etc.. who will be working FOR you on your “program.” But the reality is you need to sell.
You will only be as successful as your team is good and therefore you want the best people working with you. The best team members know their strengths, know what they want and know who they want to work with. The best team members are also very busy and have limited bandwidth because others have also figured out they are good. Because of this, you need to be able to sell “your program” and convince the best players that they should work with you.
How To Recruit The Best Team – 3 Things You Must Do
Be Clear On Expectations and Communicate the Right Way
If you call up a great property manager and identify yourself as a real estate investor, they will most likely want to talk with you. They will quickly want to get off the phone with you however if you say things like “I really like your market, I’m thinking about fixing and flipping or maybe getting some buy and holds or possibly BRRRR’ing.” You don’t yet know what you want and the good ones don’t have time to help you figure it out. Imagine a star basketball recruit hearing from a coach “we have been running the triangle offense, but are currently experimenting with the wheel and have also considered the flex, we are also honing in our defensive philosophy. Do you want to come to our school?” No way is that recruit going to partner with that school or coach.
The strong property manager will want to work with you if you are clear and prepared enough to have a conversation that goes something like this: “I target buy and hold property in the $130K to 180K range in B class neighborhoods with monthly rents close to 1% of the property value and I’m looking for the right property management partner to help me execute my model for the long term, do you think we might be a fit?”
Ask the Right Questions
You should believe in your model enough and know your model well enough to have a clear set of questions for the potential people on your team. Asking the right questions not only helps you identify if the person is right for your team but also quickly establishes your credibility with them. If your questions are random and unfocused, you put your credibility as an investor at risk. In the property management scenario, here is an example of some of the right questions to ask:
- What is your monthly management fee?
- What is your leasing fee and do you charge for a lease renewal?
- Do you have an in house maintenance crew or do you outsource and if so, is there a surcharge?
- What property management software do you use?
- How many units do you currently have under management and do you have bandwidth to take on more?
- What is your opinion on the appreciation potential of the Southside neighborhood?
A single or even a few conversations and interactions with a potential team member are not enough. Average or below average players can have one or a couple of great games. Some players look really good in drills in practice, but struggle to translate that to productivity when the stands are packed, the opponent is playing tough defense and the stakes are real during true competition. Because your team is so critical to your success, you need to interact with a potential team member in different contexts to see how they react.
Don’t get lulled into doing business with a well-spoken, big thinking, dreamer (nothing wrong with these characteristics) who can’t execute (definitely something wrong with this). A great test to see if a person is a potential fit is to gauge their responsiveness. Timely and valuable responsiveness demonstrates that the potential team member understands your vision, believes you are credible, wants to work with you and has an execution mindset.
Beware of the non-responsive or slow to respond potential team member. A good way to test for responsiveness and a fit for your team, as in our property manager example, is to email them some sample properties that you are looking at as potential investments and ask them how much they would put them on the rental market for. It requires very little time for them to respond and the good ones will not only provide the numbers you are looking for, but some color commentary on their opinion of the property as well. Of course you can’t barrage the property manager without ever doing business with them, but you will know quickly, assuming you established your credibility, that they are not a fit if they do not respond.
In the long run, if you have a superior team and a less than optimal tactical plan, you can still win. Superior players/team members have a tendency to be able to adjust to their situation and still find a way to get positive results and overcome a flawed plan. The converse is not true, if you have a superior plan and an inferior team that cannot execute you will not succeed in the long run. The Jane’s and the Joe’s are most critical in building wealth over time through real estate.