The Core Four Dream Team
The Core Four was made famous by BiggerPockets. Author David Greene talks about how he develops his team first when entering into any new market. The Core Four consists of a Realtor, Lender, General Contractor, and Property Manager. Each are critical to your success as a real estate investor. There are multiple books I recommend reading on this topic.
The Core Four: Realtor
The realtor is probably your biggest asset in your Core Four. You might be thinking “Why?” Well it’s simple, you obtain the most wealth when you purchase the property. That is, if you do it right. Image this, you have a house worth $100k. You are able to find and purchase the property for $70k. Instantly on the purchase, you made $30k in equity. How can you do this if you don’t know what is good or bad? Get a realtor! They are the expert that has up-to-date information and has probably seen it all when it comes to real estate in the area. A good realtor can find you a diamond in the rough, and fight to get you the best deal possible.
The Core Four: Lender
The best way to keep your money in your pocket is to find a great deal on your loan. Sure it is easy to go to the nearest bank and ask for a loan. But, that’s like going to the first car dealership and agreeing to pay sticker price. A mortgage broker will scan multiple companies to find you the best interest rates and the lowest closing costs. They will find the deals that meet your unique situation and wants, not just going with a one size fits all model. Most will have an origination fee, so be mindful of that, but the fee will likely be less than the money lost if you didn’t use one.
The Core Four: General Contractor
Do you find yourself to be handy? Do you think you can do most of the work yourself? Well, consider your opportunity cost. How much is your time worth? You will likely need to hire contractors to do part of your renovation. A general contractor may be looked at as an added expense, except they know the best companies and can usually get a good deal on the work. Additionally, they run the project for you, so you don’t have to worry about scheduling conflicts with multiple contractors. They will save you time, money, and, most importantly, headache! A good contractor will also give you a realistic cost estimate on the work because they’ve likely done it all before.
The Core Four: Property Manager
The final piece to the puzzle is the property manager. This piece effects your cash flow in multiple ways. The first, and most apparent, is the fees associated with management. Because of this, I always include this in my analysis. A property manager will scan potential tenants and put the best in your property. This will save you headache, and potential legal battles, in the long run. Also, the property managers have an arsenal of handymen that can fix issues, and typically at a discount. Lastly, the property manager is familiar with the market and knows how much you can get in rent, which is useful, especially if you’re not from the area.
The Core Four Are Deal Finders
One added benefit to having a strong Core Four is for the next deal. Each piece of the Core Four has a different angle at finding a deal. The realtor has an obvious ear to the ground on the MLS, but also may have past clients that are interested in selling their property. Potentially, you can purchase the property off market and provide your realtor a small bonus as a thank you.
The broker can be used more for networking than a direct source for deals. I found my mentor in Ohio through my mortgage broker. Let your broker know what you’re trying to do. Ask them to let other investors know that you would like to meet with them for a mastermind conversation. It cant hurt to get multiple perspectives on your market.
A general contractor will know places to find great BRRRR deals. Perhaps they’re doing work for a client that may be interested in selling their property. Let your general contractor know you’re looking for fixer uppers that would add value without breaking the bank. They might know exactly where to go.
Finally, the property manager is a great source for deals. You are likely not their only client. Perhaps, they have a client who is looking to retire from owning real estate and is looking to sell. One of the first places they may go is to the property manager. Many times, there is a clause in the property manager’s contract that states they have to use the manager as the realtor in the event they want to sell. Just let your property manager know that you’re ready to expand and they could bring you an off market deal.
