1. How to Pick the Right Consultant
When choosing a consultant, be sure they are qualified to handle matters pertaining to your investment. Search for professionals who have education and experience in the real estate field, in general, and rental properties, in particular. Begin your search for real estate experts by asking for referrals from individuals in the profession
2. Beware of "Know It Alls"
Beware of the consultant who is willing to give you advice on all subjects. Some people will expound on anything and everything, even if unqualified or unknowledgeable. Always make sure you have people working for you who have the expertise to get the job done.
3. Getting the Most Out of Your Consultants
The best way to get the most out of your meetings with consultants is to record them. You will be surprised to find how much you didn't hear when you play it back. Let the consultant know before you begin that the meeting is being recorded and get approval. If there are any objections, get another consultant.
4. Controlling Fees
Your recording can also help you control billing costs. Consultants who bill on an hourly basis should give you a breakdown of hours (or a fraction thereof) based on specific matters. Make note of the hours recorded each time you use the consultant's services. Then when you receive the bill, compare the hours. If the bill doesn't agree with your figures, ask to see supporting documentation, such as copies of telephone bills and employee time sheets.
5. Avoiding Unnecessary Billings
Remember, you're working with an expert. Don't be afraid to ask, "Why do you have to research everything?" You're right in thinking they should have a strong background in the area of their expertise. The more research, the more billable hours. Be careful!
Beware of the consultant who charges a flat work fee. I've talked with attorneys who charge $200 per hour for their time. However, if you ask the same attorney to prepare a living trust, the attorney might quote you a flat fee of $5,000, knowing that with the help of a secretary and a word processor, actual billable time won't come close to that figure.
Insist on getting a written cost estimate before any work is performed. An experienced consultant should be able to do this. If the consultant cannot, find out why not. Unless you're asking the consultant to do something that is outside his or her field of expertise, there shouldn't be any reason why an estimate can't be given. If you are asking for something outside of the consultant's area of expertise, don't. Get another consultant.
6. Protecting Yourself
All consultant reports should be in writing. Recommendations, estimates, interpretations, and opinions must be written down to avoid any misunderstandings. Your decisions are made based on the consultant's input. Don't be trapped into the "I said this instead of that" or "I meant this instead of that" syndrome. The degree for potential liability is extremely high. Protect yourself by getting everything in writing.
Have the recordings transcribed or make written notes of your meetings with the consultant. Be sure everyone involved receives a copy. The notes must reflect what took place at the meeting (and should include telephone conversations), the plan of action, and who is responsible for what. Always protect yourself from other peoples' failures. Having it down in writing helps.
7. Keeping Control
Probably the most important rule to remember while working with consultants is to maintain complete control. Consultants provide the support for the decision-making process. It's up to you to maintain control by making the decisions. Don't relinquish command to anyone. If you lose authority, you'll end up losing your money.
ABOUT THE AUTHOR: Eugene E. Vollucci, is considered to be one of the foremost authorities on real estate taxation and rental income investing and has authored four books in these fields. He is the Director of the Cal State Companies Center for Real Estate Studies, a real estate research organization.
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