Relationships with people are the foundation of most businesses. Relationships lead to referrals, which make our businesses sustainable. Otherwise, commercial real estate is just a job, not a career, and we are effectively unemployed after each and every deal. This advice is true for fix-and-flip investors. Building a team of people who can help you through various stages of the house flipping process is a key strategy to long-term success.
Mutually beneficial relationships are the foundation of every successful real estate team. But with whom should you build those relationships? And how do you build them? Here’s a quick look at three relationships every investor should develop and maintain.
Build Relationships with Realtors
Realtors can be a crucial part of your success as a fix-and-flip investor and it’s easy to see why. A good realtor is intimately familiar with their market, having firsthand experience concerning the ins and outs of local home sales of all types, whether they’re fix-and-flip deals or something more traditional. If anyone knows what a particular house will sell for and when, it’s a local real estate agent.
What’s more, a realtor can connect you with both potential sellers and potential buyers. That means you could have an easier time finding investment properties — and an easier time selling them, too.
Building relationships with local real estate experts, then, should be a top priority, right? Yes, but it’s important to go about that relationship-building process the right way. After all, every other fix-and-flip investor in your area probably has a similar idea, and not everyone takes things as seriously as you do.
The problem a lot of agents have is that they are often approached by people who are ‘investors’, but are not actually people who are working hard to make things happen. So how do you stand out? Demonstrate your value. Show that you’re a serious investor and that you have a plan to make your investment goals a reality.
“If you walk in and say ‘I want you to help me find houses to flip’ that is not nearly as strong as ‘I plan to put five houses a month under contract. Is that something you can help with?’”
You can also present yourself as a resource for the realtors in your area. People want to work with partners who can help them, and as a real estate investor, you may find yourself with plenty of information that can be of use to a realtor. Share your knowledge of the market with realtors and you may find that property tips will follow.
Build Relationships with Contractors
Unless you plan to do every bit of your renovation work yourself, there’s a good chance you’ll be working with a contractor. Having access to reliable general contractors, electricians and plumbers, therefore, is crucial to your investment success.
As with realtors, it’s important to demonstrate that you are a professional investor worth taking seriously for presenting yourself as a professional, organized investor:
- Present the scope of work on business letterhead (or in an email with a professional signature, with the attachment formatted in a professional manner)
- Have a website and a phone number the contractor can investigate on their own to establish your level of professional commitment to your properties
- Effectively present all of the same kinds of background details that you would look for in a potential business partner to figure out whether or not they were professionals
That advice, however, only addresses the pre-work portion of your relationships with contractors. Once your contractor has finished their work, follow through quickly with payments and any other necessary business communication. If you establish yourself as a reliable person to do business with, your relationships will remain steady and strong.
Build Relationship with a Commercial Mortgage Broker
Whether you choose a hard money loan, a HELOC, or conventional bank financing for your next fix-and-flip investment, you’ll need a lender to guide you through the process. It’s crucial, therefore, for fix-and-flip investors to have a good relationship with a commercial mortgage broker who can help you to build relationships with a network of lenders. And much like the other relationships on this list, communication is key.
To build that strong communication, don’t be afraid to get personal. A commercial mortgage broker will want to form a personal relationship with their clients. This will help to ensure that they feel comfortable with you and have a better understanding of your business goals and future potential business.
Clearly communicating your goals while demonstrating your plan for success goes a long way in building trust in the broker/lender/investor relationship. Know what your goals are and how you will reach them, and be prepared to communicate those goals to your broker.