Focusing on management of the real estate investment the roles and responsibilities of partners can have a major effect assuring a successful residential investment. Especially in the case of a growing portfolio properly resourced responsibilities goes far to achieve expected return goals and to minimize risk.
The best partnerships are composed of individuals with complementing skills, talents, and interests coupled with a division of responsibilities appropriately taking advantage of these factors. Planning the investment team considering this concept goes far to make investor expectations a reality.
For the ideal investment team what are some of the most important skills we should expect to see?
Top skills should include:
Strong acquisition identification and qualification skills assuring a project will perform as anticipated;
New project purchase agreement negotiation and post agreement due diligence skills including managing reports and other due diligence needs;
Strong market analysis skills;
Investor and equity development skills, experience, and contacts;
Banking services management;
Accounting and financial management skills;
Leasing and property marketing skills;
Great property management experience and skills;
Lender development and lender closing perhaps specialized to certain type debt including FHA, Fannie Mae, Freddie Mac, conventional debt, USDA loan programs, private debt, etc;
Property sales management;
Property management and partnership agreement management;
Investor relations and securities compliance; and
Having all these skills on the team is a great first step. However, for the plan to work, the skills and experience need to be spread among the managing partners and preferably will not be focused in one individual. While one individual may have the total set of experiences and skills, their ability to perform all of these all of the time to the level an expanding portfolio will likely demand can be very weak. This is in fact where many investments begin to weaken or fail.
A good way to divide up the skills might be to place one partner in oversight of acquisitions and investor development, focus another on the day to day property management, place a third in charge of finance, banking, and loans, and give a fourth responsibility for negotiating agreements for purchase and sale and following the market to assure sales occur when they need to for the interests of the investors.
Making this division of responsibility along areas that are clearly and easily separated can go far toward assuring the success of an expanding residential investment opportunity. And, the division of labor makes the likelihood of failed focus much less likely thus not only assuring success, but protecting against failure.
By Robert Holiday