You’re familiar with the saying, “It takes a village…”
Well, in the world of real estate investing (REI), it doesn’t take a village—but it does take a dream team—to build a successful, growing and thriving company.
So, how do you go about building your rockstar real estate dream team? And where do you look for your Michael Jordans, Wilt Chamberlains, Shaquille O’Neals, Larry Birds and Magic Johnsons?
You’re in luck, because this is exactly what I want to cover today.
Now, keep in mind that every investor’s dream team will look a little different…
As your business grows, you’ll need to hire employees gradually—so one person may take on a variety of roles. In the end, you need to take my advice and customize it to your specific needs. There is no “one-size-fits-all” list of employees that will work perfectly for every REI company.
Before the Dream Team: Building Your Business
If you’re brand-spankin’ new to the REI business, you’re probably not anywhere near hiring an employee yet. BUT this is still valuable information that you can internalize, and—one day—you can apply it to your own business.
Before you hire anyone, you need to get your company’s policies and procedures down pat. If the foundation of your business is no good, you’ll never be able to effectively hire and lead employees to follow in your footsteps.
So, your first goal is to create a 7-figure business system. The way I see it, there are 5 simple steps to building a 7-figure business system, and it boils down to this:
- Do it – get out there and do what it takes! You have to take risks. You may not have the perfect website or the best marketing campaigns, but you still need to take action when it comes to finding and scoring deals. Be willing to make offers!
- Duplicate it – Just because you get one contract doesn’t mean you’re done! Even when that contract closes, you need to be already focusing on building your pipeline.
- Document it – Write down what you did right and what you did wrong. I recommend using Screencast-O-Matic because it lets you record what is happening on your screen (and you get up to 15 minutes for free!). This is an amazing tool for creating training videos for your team members and will ultimately save you a ton of time. No business is worth anything if the processes and procedures are not well-documented.
- Delegate it – Delegate as much as humanly possible! You are at the top of the food chain (or, this is the goal that you’re working toward). Ask yourself this: if you can’t go on a 2-week vacation without your business falling apart, why is that? What systems do you need to put into place so you can take time away from your business when needed? You should be able to close deals remotely, because you have delegated as much as possible to others!
- Supervise it – Make sure you’re able to overlook and oversee the work that is going on. You shouldn’t be spending the majority of your time putting up drywall, putting together direct mail pieces by hand or driving for dollars. (Not that any of these things are totally bad—they just should not be your main focus!)
So, what does a 7-figure business system look like? These are a few defining characteristics:
- You must raise private money—not matter what!
- If you don’t have private money, it’s just from a lack of effort. You need to sit down in front of someone who has money, present your opportunity and ask for an investment. Be crystal clear on what the investment is, and how the private investor will make their money back.
- You need a project manager/general contractor to manage rehabs, renovations and improvements.
- Even if you are a contractor, I don’t care! In this business, you are an investor, and you should not be doing this work yourself. Bottom line. As an investor, you need to make deals happen – and you cannot make deals happen if you are hanging drywall!
- You need to build your inventory.
- You can’t market if you don’t have properties. And you can’t wholesale if you don’t have properties.
- You need to use direct mail marketing.
- At first, it’s beneficial to do this yourself, so you can figure out what works best for you. Once you have your system down, hire someone else to take care of the work.
Gathering of the Rockstars
Once you have a solid business in place, you’ll be ready to hire.
Now, I mentioned this before, but I want to say it again – because it’s SUPER important: not all of these roles/positions will be right for your business. Some of these are roles that you will fill yourself, or maybe you see yourself hiring for certain roles a few years down the road.
You need to know your own business, and apply this advice where you see fit.
Once you have the means and the ability, you’ll want to delegate as many of these tasks as possible; decide which tasks you 1) don’t like and/or 2) aren’t very good at. Then, you’ll know which roles you need to hire someone for.
So, without further ado, let’s look at the 7 roles in your real estate investing rockstar dream team…
Position #1: Marketing Manager
Your Marketing Manager should be able to execute all seller, buyer and private lender marketing initiatives.
A few of their responsibilities would be:
- Driving leads – The Marketing Manager should focus on direct mail efforts, Craigslist ads, bandit signs, TV/radio/internet ads and more. Their main role is also to drive leads into the sales “money phone” (whether it’s setting up Google voicemail or a PATLive account) and to drive leads to a “money website” (web form or landing/squeeze page).
- Handling property launches – This might include contacting agents, purchasing an item (grill, iPad, etc.) to give away.
- Handling all online marketing efforts – This includes Facebook, Google, videos, and any other social media.
- Managing your buyer database – They may use a system like FreedomSoft to keep track of buyers and to make notes on which marketing methods are most effective.
- Taking care of your private lender marketing – This includes managing the private lender database, handling email marketing to private lenders, creating physical monthly newsletters, and holding private lender “lunch & learn” events.
You might also consider hiring a Marketing Manager who is a licensed real estate agent (so they have MLS access, as well as a thorough understanding of the industry). It’s not a deal-breaker, but it certainly will help!
Now, let’s talk $$$. How much should you pay a Marketing Manager?
Consider offering a small salary (around $2K per month) plus bonuses, based on lead flow. Also take into consideration how many seller, buyer and private lender leads your Marketing Manager is driving into the money phone/websites.
There is really no “perfect” way to pay them—just make sure you’re both on the same page about commissions, bonuses, etc.
Also, depending on your resources and/or preferences, you might have a Marketing Manager who also serves as the Acquisitions Manager and Sales Manager (3-for-1!) This is great if you are “boot-strappin’ it.”
Or, the Marketing Manager and Acquisitions Manager could be the same person, and the Sales Manager could be a licensed agent who is paid on commission only. Find the “blend” that’s right for you and your business.
Position #2: Acquisitions Manager
Obviously, this is your person who will acquire properties. Kind of goes without saying, right? They will be finding rehabs, wholesale opportunities, short sales and rental/lease options.
Again, it might be helpful for this person to be a licensed real estate agent. And they will work primarily over the phone/email and out in the field.
The Acquisitions Manager will also be working the leads that the Marketing Manager created. They will be the “mover and shaker” of your business.
You have to have a high level of trust with your Acquisitions Manager…
I know many investors who would never want to give up this control to someone else. But, as your business grows, you have to be comfortable with someone else closing deals in your place. If you’ve trained them properly, and have good policies and procedures in place, it should be no problem.
This role will also take care of:
- Inside sales
- Managing and processing all seller leads
- Making inside phone sales
- Booking outside appointments in the field
- Note: set a quota for the number of offers you expect this person to make in a week or a month; ask them to track the offers, the circumstances, and the response in FreedomSoft (or whatever software you use)
- Property evaluations
- REO research, evaluation and offers
- HUD bids, short sales, FSBO/off-market properties, vacant homes, etc.
- Outside sales and property evaluations
- View all properties
- Negotiate purchase price with sellers and listing agents
- Contracts and offers
- Write and make all offers
- Use an automated offer formula
- Execute and sign contracts on behalf of the company
- Collect paperwork for each transaction
As far as compensation goes, you can offer a small salary ($2K/month) plus commission based on each purchase OR a draw against the commission based on each purchase. Also, they can earn around 3% commission on the sales price for every property you buy.
Again, there’s no exact way to do it—just find what works for you. The goal is to keep this person motivated, so you should compensate them fairly for a job well done.
Position #3: Short Sale/Loss Mitigation Manager
This person is the liaison who communicates with the Sales Manager and the listing agent. Plus, they can work directly with the title company to order title work.
Other responsibilities might include:
- Coordinating funding with the property owner
- Coordinating the “hand off” to the Acquisitions Manager
- Coordinating the “hand off” to the Rehab Project Manager
- Coordinating the “hand off” to the Sales Manager/Agent
So, as you can see, this will naturally be a highly organized, people-friendly person.
The compensation for this role usually involves no salary; instead, they receive $1,500 per closing OR 1.5% of the purchase price (whichever is greater). And, the fee is paid by the buyer.
Now, keep in mind that this person probably won’t work just for you1unless you have a boatload of short sales. And that’s totally fine.
Position #4: Renovation Manager/GC
I like to call this person my Construction Manager – you do you.
Basically, this person should have experience with rehab project management and rental property management (if this applies to your business/situation).
I never understand these investors who have 90 single-family properties and who are single-handedly running around like crazy, trying to get tenants to pay their rent. It’s such a waste of time!
Always hire someone to take care of this—even though it costs a little bit of money. It will save you SO MUCH time and frustration.
I have a 6-unit property that I—legit—haven’t set foot in for 2 years, and I get a rental income check every month. Do things go wrong? Yes. Do toilets break? They sure do. But I got a guy on speed dial; he goes to fix it and invoices me.
Do I care about broken toilets or busted doors? No. My job, as the CEO of the company, is to hear about the problems after they’ve been solved.
So, in a nutshell, this person will handle renovation coordination efforts including:
- Utility transfer
- Walk throughs
- Scope of work
- Hiring/on-site management of subcontractors
- Hiring/on-site management of skilled and unskilled labor
- Job bidding
- On-site management of rehab schedule and budget
To compensate your Renovation Project Manager, you’ll usually pay no salary, but 15%-20% of the net profit from each property rehab. They are worth it—for sure!
A general contractor, which is a slightly different role, will usually get 10%-30% of the budget—in addition to the 15%-20% profit. So, if your budget is $100K, they will charge $30K, for example. (Plus the 15%-20% of the net profit.)
If this sounds like an outrageous amount of money, ask them to break down their costs…
When you subtract the materials, costs to pay their workers, etc., it actually leaves a very fair amount for their own compensation. It’s not as crazy high as it sounds.
It’s also a good practice to give your general contractor a bonus for consistently good work. This will keep them motivated and help build a strong relationship.
Position #5: Sales Manager/Preferred Listing Agent
For this role, do not—I repeat—do not hire someone because they are your friend, neighbor, cousin, etc. who just happens to be an agent.
You want someone who has at least 5 years of experience as a Realtor, who has closed at least 50 deals and who has a full-blown marketing plan, printed out, that they can physically show you.
This person will also:
- Sell rehabs
- Sell wholesale deals
- Sell retail listings
- Fill vacant rentals
- Sell lease options and owner financing deals
- Host property launches/open houses
- Coordinate contracts
Typically, this person has no salary but will charge a 2%-3% commission for each listing (for admin. work, marketing and tech responsibilities) OR a flat fee of $200-$800.
Bonus Tip: It can be helpful to put this person’s face/contact info on your direct mail marketing pieces, because interested buyers/sellers are more likely to contact a licensed Realtor than a real estate investor.
Position #6: Office Manager/Financial Controller/Executive Assistant
Now, this might be your final hire as your company starts to get bigger and bigger… but an Office Manager could also be a personal assistant to you (someone who does your errands, cleans your house, etc.).
But, on the other hand, if you’re doing deals left and right, and writing a ton of checks for your business, you need someone who understands accounting fairly well.
So, again, you can customize this position to fit your needs. In general, this role might handle:
- Metrics (reporting)
- Weekly 90-180 day budgets
- Weekly property budgets
- Weekly, monthly and annual forecasting with you
- Create and implement business systems, and train new employees on these
- Financials and bookkeeping
- Human resources
- Property management
Depending on what this role entails, you might pay a salary of anywhere from $35-$65K/year, plus a small annual bonus based on the company’s performance.
Position #7: Owner/Entrepreneur
That’s you! You are the head honcho…
Your role is to create business systems and to document these processes/procedures on paper. Then, you will train your employees on these systems, so they can function effectively without constant feedback from you.
Of course, you’re also in charge of funding and raising all capital, and you’re the chief networker and chief hiring director.
About 90% of your role should involve funding responsibilities like:
- Recruiting and networking for private money
- Transactional funding
- Hard money
- Gap funding
- Bank financing
- Lines of credit
So, how do you pay yourself?
Answer: just like any other employee.
Pay yourself a base salary, plus a quarterly bonus that is based on company performance—and leave as much money in the company as possible, for cash flow and confidence.
Bonus Tip: Take 10% of your net profit on a property and put it back into marketing.
Doing What it Takes
Looking at this list, you might be thinking, “Man, I don’t know if I’ll ever get to that point.”
But let me reassure you… every successful investor started where you are now. Nobody’s dream team was built overnight. It takes time, effort, and hard work—but if you keep it up, you’ll be hiring employees in no time.
First, focus on creating sustainable, effective policies and procedures. And, of course, find deals and grow your business. The rest will follow.