How to Build a Great Investment Team: Part 3

Every team has “support players.” For example, we at New Funding Resources consider ourselves support players for our borrowers. We will not scout the neighborhood for investment opportunities or help you paint a property. However, we might offer something more valuable – our expertise and many years of experience in seeing what works and what doesn’t in real estate investing.

Support players are the people who work hard but don’t always get recognized as star players. This is not to say that these people are not important. In fact, without these people, the whole process would break down, but you don’t hear them mentioned as much as the lawyer, lender, or real estate agent. These are still key members of your team, so you need to choose them wisely and recognize their worth.

Home Inspector

Someone you may have not thought about adding to your team is a home inspector. The inspector serves as the lens you use to see the property clearly. A good home inspector can see through the smoke and mirrors and tell you what is really going on with the property.

Home inspectors play a crucial role in the real estate investment process by providing a comprehensive assessment of a property’s condition. Their expertise helps investors make informed decisions, mitigate risks, and protect their investments. By identifying potential issues early on, investors can save money, negotiate effectively, and ensure the long-term value and safety of the properties they purchase. Therefore, hiring a qualified home inspector is highly recommended for real estate investors looking to make sound and successful investment decisions.

Having a home inspector is especially valuable to newer and less experienced investors. If you don’t have experience renovating homes, you have a higher chance of missing a fundamental flow or being misled by a contractor looking to win your job by underbidding. A home inspector can help you avoid these issues and bring additional clarity and accuracy to your renovation cost estimate.

How to Choose the Right Home Inspector

Here are some steps to help you choose the right home inspector:

1. Ask for recommendations from your real estate agent, colleagues in the industry, or friends who have recently purchased properties.
2. Check online reviews and testimonials to gauge the inspector’s reputation and reliability. Look for consistent positive feedback and any concerns raised by previous clients.
3. Ensure the home inspector is licensed or certified in your state or region. Licensing requirements vary by location, so verify that the inspector meets the local standards.
4. Request sample inspection reports from prospective inspectors. A well-organized and detailed report should include descriptions of findings, photographs, and recommendations for repairs or further evaluations.
5. Understand the inspector’s process for conducting inspections. Ideally, they should examine all accessible areas of the property, including the roof, attic, foundation, electrical systems, plumbing, HVAC, and more.
6. Obtain quotes from multiple inspectors and compare their pricing structures. Be cautious of significantly low prices, as they may indicate less thorough inspections.

By following these steps, you can effectively choose a qualified and reliable home inspector who will provide a comprehensive assessment of the property, helping you make informed decisions in your real estate investment endeavors.

Insurance Agent

Another person every real estate investment team needs an insurance agent. You want to make sure you factor in the cost of insurance in the beginning of the process. You never know what previous claims may have resulted in higher premiums or a situation whereby the property may be uninsurable. A good insurance agent can help you know these things early on in the process so that they can be factored into your investment.

Bear in mind that properties undergoing renovations typically require a specialized type of insurance. Not all insurance companies offer this type of insurance, so you might not be able to work with your neighborhood insurance agency. At New Funding Resources, we ask our borrowers to obtain a policy called builder’s risk insurance. Once the renovations are completed, they can switch to a vacant dwelling policy.

It’s natural for real estate investors to look for the cheapest possible insurance premiums. Keeping the costs down is important, and we encourage you to be proactive in doing it. However, please remember that your insurance policy’s reliability is also important. If anything happens to the property (one of our borrowers had a tree fall on the house just ashe was almost done rehabbing it), you will need to count on your insurance provider’s cooperation and fairness to recoup your expenses.

New Funding Resources is a premier private money lender in the DC area. If you have an immediate need for an investment property financing, please fill in our online application. For more information on how to build a robust real estate investment team, see our previous blogs (Part 1 and Part 2).