Build Out Your RE Team Starting with a Five-Star Broker

Owning rental properties should not be a solo adventure. The entire experience is better when you have someone to share it with.

We recently talked about how the most important person on your real estate team is your spouse. Make sure you each understand the financial, time, and emotional commitments involved.

Isn’t that true for most things in life?

Whether it’s a project you’re working on or a vacation you’re taking, it’s better when you do it with other people.

Owning rental properties is no different.

If you’re considering your first rental property, don’t fool yourself into thinking you’ll be earning passive income. 

For me, the benefits of owning rental properties significantly outweigh the downsides of being a landlord.

It’s a tradeoff that I would happily make again and again… as long as I have good help along the way.

That help starts with a real estate broker.

If you find the right broker, he will guide you in building a rental property portfolio that you’re proud of.

Let’s take a look.

Start building your team by finding the best real estate broker.

Start building out your team by finding a real estate broker (or real estate agent) who matches your style and understands your goals.

Think of your real estate broker as a concierge at a five-star hotel in a foreign country.

My wife and I went to Australia years ago. It was probably the best trip we ever took. We started in Sydney and eventually made our way up the coast to the Great Barrier Reef.

While in Sydney, we took a couple of day trips to the Hunter Valley wine region and the Blue Mountains. We climbed Harbour Bridge and saw some animals at a zoo we had never seen before.

We met some amazing people and had some wonderful meals.

All of these experiences were arranged through the concierge at our hotel.

Before we ever left Chicago, we coordinated with the hotel’s concierge. He asked us what our priorities were, sent us options to consider, answered our questions, and then made all the arrangements.

The decisions were ultimately ours, but the concierge used his expertise and what he learned about our priorities to help us make the best decisions. Importantly, he steered us away from making poor choices.

We would have been completely lost without his guidance.

Just as the concierge helped us navigate Sydney, your real estate broker will help you navigate the rental property experience.

Your broker will wear many hats in helping you find a great rental property.

During your search for a great rental property, a good broker will:

• Educate you about the market you’re investing in.
• Send you properties that match your goals.
• Tour properties with you to help identify any red flags.
• Negotiate on your behalf to ensure you get the best possible price.
• Connect you with other key members of your team.
• Steer you away from making poor choices.

These are all invaluable services that a good broker can provide.

But, you don’t just want a good broker. You want to work with the best brokers.

The best brokers will do all of things for you during the acquisition process. But, that’s just the beginning.

The best brokers have one other trait in common.

The best brokers remain a key part of your team (life?) long after the transaction has concluded.

Getting a good rental property is just step one. Keeping the property is just as, if not more, important.

We’ve talked about how owning rental properties is a long-term game. You want a broker on your team who’s in it for the long run to help you navigate challenges as they pop up.

That’s why you want a broker who is willing to help you keep that property for the long run. That might mean helping with marketing and showing your property.

More importantly, that means continuing to give you advice and tutelage as you learn to be a landlord.

For that reason, if you are going to buy a rental property, I recommend you work with a broker who also owns rental properties.

I recommend you find a broker who is also an investor.

There are different factors to consider when buying a rental property compared to buying a primary residence.

A property could be a great home but would be a poor rental.

When it comes to working with a broker, you want somebody on your team who has personally experienced the challenges in owning rental properties that lie ahead.

Real estate brokers who are also investors are better equipped to teach you if tenants will love or hate a certain rental apartment.

Here’s a very basic example to illustrate this point:

I use the garbage disposal in my home multiple times every day. I never really thought about it before, but the garbage disposal is a wonderful invention. I’ll go as far as to say that I love my garbage disposal.

However, in my rental properties, I refuse to install garbage disposals.

In rental properties, garbage disposals constantly break because tenants are not always careful about what they put down the drain. Each time a garbage disposal clogs or breaks, that’s a costly repair. It’s just not worth it in a rental property.

I first learned to avoid garbage disposals in my rental properties years ago from my broker.

Yes, it’s a small consideration overall. You’re not going to pass up on a wonderful property because of a garbage disposal.

But, each property you look at will have countless little elements like this that need to be considered.

A broker who is an experienced rental property investor will have a better eye for these types of things.

Find a real estate broker can help make a list of the most desirable features for renters in your market.

My wife and I have worked with the same broker in Chicago for almost a decade. He’s been a mentor and a friend. He has helped us in countless ways, including putting together a list of features we look for in every rental property.

It’s not an exhaustive list, but here are some of the most important factors we evaluate when considering rental properties in Chicago:

1. Location, location, location. In Chicago, proximity to the L and social life (coffee shops, restaurants, bars, etc.) are crucial. Most of the young professionals we rent to are still in the “going out” phase of life. They want to live in fun neighborhoods so they can enjoy themselves when they’re not working. They typically stay in our apartments for 2-3 years, oftentimes before buying a place of their own and “settling down.”
2. Taxes. Property taxes can eat away your cash flow. We have high property taxes in Chicago across the board, but taxes vary widely from neighborhood to neighborhood. I look for properties in areas that have more attractive taxes.
3. Big bedrooms. One of the most common questions I get when I do apartment showings is, “Can I fit a king size bed in here?” People love big beds these days. This can be a challenge considering Chicago’s standard 25-foot wide lot. I look for properties with a minimum bedroom size of 10 x 10.
4. Outdoor space. Young professionals want to have outdoor space, even if they never use it. When I was a renter, I always wanted an apartment with a balcony for my grill. It didn’t matter to me that I only used it a handful of times each year. Maybe having outdoor space made me feel more grown up?
5. Parking. Even though Chicago is a very public transit-friendly city, people still like having cars. Because most young professionals aren’t using their cars every day, they want to keep it safe in a dedicated parking space.

There are certainly other factors we consider, but these are some of the first things we look for thanks to the guidance of our real estate broker.

A good real estate broker is absolutely critical if you’re investing outside your home market.

I live in the Chicago area and own a rental property in Colorado. Everything we just talked about becomes even more important when you invest outside your home market.

In your home market, you have the benefit of relying on your daily experiences to help select the right property.

I rented apartments in Chicago for 15 years before I bought an apartment building. That gave me a huge advantage when looking for a good rental property.

I didn’t have the same level of intuitive knowledge in the Colorado market.

Even if you have personal experiences in certain out-of-state markets, your knowledge will never match that of your hometown. No matter how many times you’ve visited a place, it’s not the same as living in that place.

That’s why having a good broker on your team becomes even more critical when you’re investing out-of-state.

I’m happy to say that our real estate broker in Colorado is the best there is.

And if you ever tell him I said that, I’ll deny it and say I was hacked.

Our Colorado broker spent hours and hours educating us about the local market when we were shopping for a rental property.

Even though my wife and I had vacationed in the area for years, we didn’t know the first thing about real estate in the area.

Before we considered any specific units, we had numerous conversations with our broker about our goals and preferences. He helped us pinpoint locations and features that we had not previously through about.

I still have the pages of notes I took during these conversations, which I reviewed constantly during our search.

If you are going to shop for properties outside your home market, be sure to find a good broker first.

The most successful rental property investors have a team of professionals working with them.

It’s not an exaggeration to say that having the right people on your real estate team can make or break your investing experience.

Having a good team in place, starting with your real estate broker, will help you avoid mistakes and stay motivated so you can keep your properties long-term. 

I’ve seen too many investors sell their rental properties after a couple of years because they didn’t have the right people on their team. They end up making preventable mistakes and give up because being a landlord is too hard.

Unfortunately, that means they give up their properties long before getting the benefits from cash flow, appreciation, debt pay-down, and tax advantages.

If you’re going to take on the challenge of being a landlord, you might as well hold your properties long enough to reap the benefits. 

And, you should take all the help you can get along the way, beginning with a great broker.

You will not regret having a great broker on your team.

My wife and I have been incredibly fortunate to work with two top-class brokers, first in Chicago and then in Colorado.

Thinking about it now, our brokers are similar in that they have been teachers and mentors to us.

Before you start looking for your first rental property, be sure to work with a great broker. Don’t just settle for the first broker you meet with.

This may take some time. Years ago, my wife and I met with six different brokers in Chicago, who all came highly recommended.

We were patient, asked a lot of questions, and went with the person who matched our style and who we felt comfortable with. The time we took during this process was well worth it.

Like a five-star hotel concierge, our brokers have made our investing experience as smooth as possible.

Without their guidance, I highly doubt we would have bought, and still own, five properties today.

Have you worked with a real estate broker before?

What should new rental property investors be on the lookout for?

Tell us about your experience in the comments below.