How to Build a Great Investment Team: Part 1

As the saying goes, no man is an island. This is very true when it comes to your real estate investment strategy. To help you achieve maximum return on investment when it comes to buying investment property, you are going to need a TEAM of professionals. You can’t do it all alone. Our next few blogs will talk specifically about some of the people you need to consider when forming a real estate investment team.

Financial Advisor

The first member of your team is your financial advisor. You cannot be all things to all people. Therefore you need to choose experts that can fill in for your lack of knowledge on specific subjects. This is very much the situation with a financial advisor.

A financial advisor can help real estate investors define their investment goals and develop a tailored investment strategy based on their risk tolerance, time horizon, and financial objectives. Real estate investment often requires substantial capital, and financing options can vary depending on the type of investment and the investor’s financial situation. A financial advisor can help investors evaluate financing options, manage debt effectively, and optimize cash flow to maximize returns.

Real estate investing comes with various risks, including market fluctuations, property management issues, and liquidity concerns. A financial advisor can help investors identify and manage these risks through strategies such as asset allocation, insurance coverage, and contingency planning.

Last but not least, a financial advisor can help you plan your exit strategy, whether it’s selling the property, refinancing, or passing it on to heirs. They can help investors plan for contingencies and make strategic decisions to maximize returns and minimize losses.

Obviously you would want to choose a financial planner who is familiar with the issues associated with buying, selling and holding real estate. Failure to include them as part of your real estate investment team would be akin to not adding a coach to a football team. You might win an occasional game, but your overall season will be a disaster.

CPA

Before you invest, you need to be self-aware about your current financial situation. You don’t want to put yourself in a bad situation or make a current situation worse by making decision based on bad financial advice. That is why the next member of your team is your CPA (Certified Public Accountant). CPAs play a critical role in helping real estate investors navigate the complexities of taxation, financial reporting, entity structuring, and compliance, ultimately contributing to the success and profitability of your investments.

First of all, CPAs can assist you in choosing the most suitable entity structure for their real estate investments, whether it’s a limited liability company (LLC), partnership, corporation, or real estate investment trust (REIT). Proper entity structuring is crucial for asset protection, tax optimization, and regulatory compliance.

Real estate investments are subject to a multitude of tax laws, deductions, and credits. CPAs specialize in tax matters and can help you navigate these complexities to minimize tax liabilities and maximize returns. They can advise on tax-efficient strategies such as depreciation, capital gains, 1031 exchanges, and passive activity rules.

Last but not least, CPAs provide accurate and reliable financial reporting for real estate investments, including income statements, balance sheets, and cash flow statements. They ensure compliance with accounting standards and regulations, providing you with clear insights into the financial performance and profitability of your properties.

Financial advisors and CPAs complement each other in real estate investing planning and strategy. Financial advisors focus on holistic financial planning and investment management, while CPAs specialize in tax planning, compliance, and financial reporting. This is not a case of the left hand not knowing what the right hand is doing. Get these people talking early in the process. Collaborating with both professionals can help you develop well-rounded strategies to optimize your real estate investments and overall financial success.

New Funding Resources is the highest-reviewed private lender doing business in Maryland, Washington, DC and Virginia. If you are considering buying an investment property and need funds fast and on flexible terms, apply today or give us a call at 240.436.2340.