Real Estate Networking: The Essential Contacts

Always wanted to break into real estate? For better or worse, real estate is an industry with an extreme case of "it's not what you know it's who you know," which can be bad news if you're an outsider looking in, but fear not! The good news is that, because it's such a network-dependent industry, it's extremely easy to network.

There's a checklist of people you need to be friendly with, and to get to them, you should start with making friends with your competition: fellow real estate investors. These are easy to meet, as you can join a real estate investment club (see the Resource Box for a directory of them) and take a few investors out for food or drinks after club meetings to make friends and pick their brains. Don't worry, most real estate investors are more than happy to tell you about who their lender is, but don't expect them to give away their bird dogs.

Check 1: Small, Local Banks
Local banks are small enough to be flexible with their lending, and to be accessible for relationship-building. While the big boys might disqualify you because your loan doesn't fit into some mathematical formula, local banks will hear you out and evaluate your loan individually. Finally, they're still relatively inexpensive, and will generally make both short-term and permanent loans.

Check 2: Hard Money Lenders
Hard money lenders are expensive, so don't be surprised to pay 15% interest and 5 points. But they're extremely fast and flexible, and can sometimes close as quickly as a few days, which is often what you'll need. Finally, they are generally collateral-based lenders, which means they may overlook your bad credit or stated income as long as the loan-to-value (LTV) ratio is low enough.

Check 3: Appraisers
Become friendly with at least one appraiser, as appraising is extremely subjective and appraisers have a lot of flexibility on their final value estimate. It helps to have them on your side, and at the very least they might cut you a break on cost if you're drinking buddies.

Check 4: Real Estate Agents
Real estate agents can refer deals your way before they go live on MLS, as many would rather make a few phone calls to sell a house quickly than go through the trouble of entering the information, waiting for phone calls, putting up signs, holding open houses, etc. Further, they can help give you a good sense of values and neighborhood trends, which makes them a great addition to your network.

Check 5: Lead Paint Inspectors
Another contact you'll need to be friendly with are lead paint inspectors, as they can walk through your rental property before testing it, and before a single application comes in. They'll tell you what needs to be fixed before wasting your money, so that when they do the real test, you pass the first time through.

Check 6: Wholesalers
Wholesalers would sell ice to their Eskimo mothers, so don't count on any favors from them, no matter how friendly you become. That said, you still need to know them, because you can score excellent deals from them, IF you do your homework, and IF you negotiate aggressively with them.

Check 7: Contractors & Handymen
These are the hardest people to work with, for a variety of reasons, but mostly because there are so many crooked and/or incapable ones out there. Ask a LOT of questions when you meet them, and walk through houses that they're currently working on to get a sense for their work. But the most important rule with contractors is to only use ones that have been referred to you by fellow real estate investors that you trust.

Most people consider this kind of networking ancillary to their main business, but in real estate, it IS the main business. These are the people who will provide you with leads, and with the services you need, so build these relationships carefully, and remember that they are what make your success possible.

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