I first met Chuck Lotzar in 2001 or so when he was a senior partner in a national law firm. At Chuck's former law firm, I delivered a presentation to approximately ten attorneys that covered my rich dad's philosophy on money, wealth creation, and wealth management. Chuck seemed to be the only one out of the ten who understood or was interested in what I was saying.
In 2003, Kim and I used Chuck to finalize one of our biggest real estate investments. It was a zero-down deal that would put more than $30,000 a month net income in our pockets. If not for Chuck, this deal could have been our biggest nightmare. He found irregularities that most people, including most lawyers, would have missed. On top of that, after the deal was closed, Chuck offered to give us a discount on some of his firm's legal fees since he felt his firm did not work as effectively as it could have. Needless to say, we told him to bill us in full and keep the money. He had more than earned it.
In 2007, Chuck again came to our rescue, this time as our personal attorney against our former business partner. The lawsuit was the worst, most vile event in Kim's and my life. If not for Chuck, I do not know where Kim and I would be today.
The good news is that Chuck Lotzar has turned out to be far more than our real estate attorney. Through Chuck's guidance, the Rich Dad Company has emerged stronger, better staffed, and much more profitable. Personally, I have emerged more mature, wiser, and less of a hothead, which is a miracle. Chuck has not only made Kim and me vastly richer; we have become better entrepreneurs and investors.
The lesson again is this: It is often through our worst deals with the worst people that the best people emerge.
I know attorneys see the world differently than most people. A working relationship isn't just a working relationship; it ideally should be a contract between two parties with built-in protections, limitations, and provisions, just in case the relationship goes south. A piece of real estate isn't just a piece of property; it's an asset that brings with it the need for appropriate entity structure, identification of risk, allocation of risk, mitigation of risk and liabilities, and a host of other legal protections and caveats associated with its development, management, and eventual sale.
I know you're thinking life is easier when you are not an attorney. You're probably right! But for me life as an attorney and particularly a real estate attorney is full of the excitement, the challenges, and the accomplishments that can come only from working with people so that they sleep well at night, have their family fortunes protected, and bring their dreams to life. It's a profession that keeps me continually learning, which I love. Real estate is a dynamic field that keeps every day at the office new and fresh.
The likelihood that you are reading the chapter written by an attorney first is slim, so I'll assume you've read at least a few chapters before mine. If you have, you've probably noticed that there are a number of references in them to team members: the professionals it takes to make a real estate deal actually happen. Many of the contributors list the types of team members that they need in the type of real estate work that they do and how they have helped.
Well, I will echo their beliefs. Team members are the deciding factors in spelling success or disaster for a real estate project. In my practice, I have seen teams that operate seemingly effortlessly and others that are clumsy and doomed to failure. So how do you assemble one that works effortlessly, and avoid the kinds that are disasters waiting to happen? The answer is, you can't. You can only try to do your best and know that the reality of your team—particularly as you are just starting out—will fall somewhere in the middle of those two extremes. Your job will be to assemble and manage a group of pros that makes its way progressively more efficient to close every deal you do.
My perspective on teams and team members is different from the views of many in this book because I am one of those team members. Many of the others in this book are the investors who drive the team. They delegate to team members who advise them. I'm the one they delegate to and who advises them on how to lead the team. That gives me a slightly different perspective. Combine that with my attorney's perspective and you have a chapter with three primary purposes:
1. To tell you who you need on your team and how to know you have a winner.
2.To identify known risks and make sure that they are properly allocated among other writing parties, including the members of your team.
3.To establish performance measures and deadlines, and to follow up to make sure that each of those performance measures and deadlines are met in a timely manner.
See, this is where my lawyer's mentality comes into play. I know your team will not be perfect, no matter how perfectly you follow this book's directions, how well you interview potential team members, or how ironclad their references were. Life and real estate deals are not that cut and dried. So what do you do? Well, quite simply, you do your best on the front end, and you attempt to protect yourself on the back end.
Before you say to yourself, "This team thing seems like more trouble than it is worth. For my project, I'll keep it simple and do most of the work I need alone. I'll keep the team small—as small as possible—and that will minimize my problems," understand that it is very hard to do anything in real estate alone. It is a team sport and as such, I have assembled my Three Rules of the Game.
Nowhere else will your team come into play more than when it is time to perform your due diligence. It's a necessary part of every real estate deal, and with the right team it can be your best friend and actually a lot of fun because you often find the hidden gems that can signal great opportunity. On the other hand, it can be the beginnings of a vivid nightmare you are living because you are the proud owner of a "problem-property," thanks to a team that missed something big during due diligence. Again, the first camp is the place to be.
You'll recall that the due diligence period is usually not less than sixty days in length. Its purpose is to discover any problems and opportunities with a property to determine whether you want to go through with the transaction, and if so with what specific stipulations. It's also designed to allocate and alleviate risk among various parties: the buyer, the seller, the lender, and the various third-party professionals on your team.
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