Just as every good business has a strategy, every successful business owner has a very carefully chosen team of individuals and companies to help him/her succeed. Your team will add considerable leverage to your investing. You can take advantage of your team members' time, talents, contacts, knowledge, and resources.
Plan. Think carefully about what skills you need on your team. For example, you are going to need an attorney, an accountant, a banker, at least one property manager, and others. Decide on the skill sets you need before you decide on which people will fill those roles.
Referrals. The best team members almost always come as a referral from someone you trust. But make sure the person referring is also a real estate investor and is knowledgeable about your situation and needs. A trusted advisor, such as an attorney, accountant, mentor or wealth coach, can be a good source of referrals.
Agreements. Make sure you have good, clear agreements in place with each of your team members so they know what is expected of them and what they can expect from you.
Before we leave the concept of a team, let me give you my personal experience with developing a real estate team. Anyone who knows me realizes that I spend most of my day growing my business. This doesn't leave me much time for real estate investing. But I love real estate investing and understand completely the importance of it in my wealth strategy.
I estimate the time I spend each week on real estate to be no more than one hour. Yet, I make in excess of $100,000 per month through my real estate investing, all because I have developed a great team and applied the other business principles we are talking about in this chapter. This brings me to our next principle: accounting.
Business Principle No. 3: Accounting
You may wonder if I include accounting as a basic principle of business because of my accounting background. While I have to admit to a natural bias in favor of good accounting, I believe that if you were to ask one hundred successful business owners if good accounting (including good reporting) were critical to their business, at least ninety-five of them would agree.
Why? Because good accounting leads to good reporting, and good reporting leads to good decisions. If you don't have the information you need, how are you going to make good decisions, such as when you should sell a piece of real estate or how to know if your portfolio is producing the desired results?
Great entrepreneurs understand the purpose of accounting. Here are a few of my personal keys to great accounting.
Key No. 1: Purposeful Accounting
Accounting should never be done solely (or even mainly) to satisfy the IRS or other regulators. Accounting's primary purpose should be to provide accurate and useful information so that you can make the best decisions. Poor investors think that the only reason to keep records is so their accountant can prepare their tax return at the end of the year.
This is a huge mistake. Good accounting is critical to good decision making. Without current, accurate numbers, how are you going to make the decision to buy, sell, or refinance your property? And how will you know which property is doing well and which is doing poorly? You won't even know if your property manager is doing a good job or not.
Several years ago, Ann and I purchased a group of fourplexes in Mesa, Arizona. The price was good based on the information we had at the time. We kept
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