Team Sport: Let’s Talk About Building a Core Real Estate Team…
“Great things in business are never done by one person. They’re done by a team of people.” - Steve Jobs
Just the other day, we were talking to one of our colleagues about scaling his business. He was discussing his current struggles with his workload and has placed hiring as a top priority.
Given our love for that kind of stuff we offered some very brief (and basic) advice to him: “Remember, it’s not WHAT [you hire], it’s WHO.”
Which brings us to our topic today. The recent conversation inspired us to write about our approach on building a real estate team, an extremely important area. And we’re not just talking about hiring internally. We’re talking about collaborating with individuals and businesses that will help us succeed with our investments and day-to-day operations; both internal and external. After all, this business is without a doubt a team sport, and this topic is critically important to making a significant impact and reaching meaningful goals.
None of this is rocket science, but a methodical process paired with thoughtfulness and craft is the recipe we employ towards this end of strengthening our team
So where do we start?
Building the Base: The Extended Team and Identifying Needs
To kick things off, it’s important to know what it takes to build a fully functional multifamily real estate investment operation.
Just like any industry, it’s recommended to cover all core verticals of the business: Operations, Sales & Marketing, Finance, Technology, and Production.
Production, for illustrative purposes in this case, is a broadly used term to define the department that is core to the existence of any product or service offered by a business. For us, our production team is our investment team. At a very basic level, CF Capital “produces” a (financial) service of managed multifamily real estate investments and offers it to a broad marketplace of qualified accredited and sophisticated investors.
From these verticals we can break things down further into key areas of responsibility:
Finance
Sourcing and managing the debt leveraged to acquire a real estate property
Overseeing and managing all company funding and finances
Managing the books through accounting methods and principles
Operations
Dealing with legal matters and compliance
Improving, maintaining, and securing the asset and the company’s entities
Interfacing with technology providers and vendors
Implementing and maintaining checklists and standard operating procedures
Sales & Marketing
Marketing investment opportunities to the investor market (i.e. business development or fundraising)
Contributing to the efforts of tenant occupancy levels, as well as managing the (potentially new) brand and the sub-market’s overall awareness
Leading education based marketing efforts through mediums such as email, social media, website, blogs, podcasts, video series, print materials, meetups, etc.
Technology
Implementing systems (hardware and software) to improve and streamline operations of a real estate property
Leveraging technology to optimize our (CF Capital, the investment manager) business’ efficiency
Production
Managing an entire business that revolves around investment partners on all sides of the multifamily real estate investing company (tying things together with the investment management service offered)
Operating and (strategically) executing a the requirements for an effective investment department
Now that we have identified the key responsibility areas, it is time for the reality check.
First things first, know what you cannot do in terms of capacity, and know what you are not best suited to do, based on your talent, disposition, and interest level. Also, right in the middle of the spectrum, one should address the areas where experts with a specialty or focus would probably do better. To paint the picture, and not go overboard with the details, we have provided examples of the personnel needed for three business verticals -- finance, operations, and sales & marketing.
In the finance department, a real estate investment management company will need a:
Lender: This is self-explanatory -- the lender is the party that provides the financing, typically in the form of a pure loan (i.e. debt). A lender may be a government-sponsored enterprise (“GSE”), an international or national bank, or a third party lender. A third-party lender would most likely be utilized if the normal GSE or bank qualifications are not met (see our post on Financing Secrets for additional information) for the purposes of a temporary bridge loan, and the source of third-party loan may be an individual or a group of individuals, but most often the loan would come from some sort of a financial services firm.
CPA/Accountant: This may or may not be a part of the property management team
Insurance Broker: This party proposes and connects you with the proper insurance to cover your property investment.
Investments: This can be done internally with outsourced extensions as needed (e.g. for due diligence or quantitative purposes).
Broker: A partner (new or existing) that manages a real estate property sale and is often involved in the sourcing of new property investments.
Title & Escrow Company: This is the party that takes care of the formalities dealing with the sale process and owning the property. In this case it would be the verification and transferring of title, as well as holding of the cash in escrow during the signing/sale process.
For operations, the following are the main parties (note, there is some personnel overlap with the finance department):
Property Manager: The property manager and it’s extended team members run the day to day operations of the property and assist us with implementing our overall business plan..
Attorney: The attorney is involved with everything from the sale and purchase to the regular legal dealings of managing a property investment.
General Contractor: A general contractor is an excellent party to “take care of business,” especially with any renovations or enhancements to the property.
Investments: The investment team must also coordinate with the on-the-ground operations teams (e.g. property manager) to make sure the investment is executed according to the business plan.
Photographer: Although a seemingly more “minor” role, the photographer is used for a number of things: from the due diligence process before the sale, to the ongoing marketing and advertising of the property.
As with the operations department, the sales & marketing department will have some overlap with the other departments in terms of personnel:
Property Manager: The property manager’s team or the team that is hired to be on-site (e.g. superintendent, leasing office staff, etc.) often can run the marketing and advertising process sufficiently to maintain/expand occupancy levels.
Marketing/Advertising Team: This can be in-house or a third-party marketing agency to aid in anything from a rebrand to general market presence (e.g. digital advertising).
Photographer: A critical individual for the sales & marketing department. Prospective tenants need to be able to see pictures, right?
Network (as a team member): We always see our network is always a team member. Whether it is a simple phone call or via social media, the network always seems to help us in one way or another.
Remember, it’s WHO
Although we may have our checklists, it really is about who we hire, not what we hire (or even how we can tell them to do their role). We’ve found this is the best way to achieve our goals.
Sometimes it’s best to put it in a metaphor: “We want everyone rowing to the same cadence in the same direction.” At CF Capital we strive for excellence. Naturally, we want to team up with the best out there… the “best in class.” When we find smart, committed people, we ask them to tell us “how” to best accomplish our goals, and we get out of the way so they can bring us there.
We typically look for thoughtful people who default towards taking initiative, and individuals with a temperament that aligns with ours, but have complementary interests or abilities. Because after all, we will be spending long, sometimes challenging hours “in the trenches” together at some point. Lastly, we seek out a little bit of dreamer in our partners to bring an ambitious craft to the table. Ambition is the core to our firm’s identity, and to align with us you’ve got to have big dreams for yourself as well, and simultaneously be humble enough to work towards creating something much larger than yourself.
Closing Thoughts
The combination of art and science in tailoring, structuring, and executing on the team building front is entirely dependent on the needs and goals of a real estate investment operation (or business). Despite the case by case adjustments, at CF Capital, we are relentless in putting together an unified team effort to achieve greatness.
“If everyone is moving forward together, then success takes care of itself.” - Henry Ford
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