Partnering or being used?

Question

I was offered a gig with a more experienced rei...he said I would do the marketing (find the deals) , bring them to him and he would find the money from another rei to renovate the property and Sell it.  We would probably split 80/20.  I am not sure this would be very helpful to me.  I would do the grunt work but what would I be learning from him?

What do you all think...how did you get started? I have some money to invest but I don't qualify for a loan due to a spotty work record because I went back to school.  Should I find a wholesaler, buy using hard money and then search craigslist for a few handymen to renovate the house and flip it myself?  Ideally I would rather not start my rei career with flips, instead I want to buy a duplex w a FHA And live in it.  I can't do that because I don't have the work experience needed for the FHA.

Please share your advice

Account Closed · Answer

@Daniella Ortiz  How many properties has this investor fix n flipped himself? What role did he play in those deals? This person doesn't want to find the deals, doesn't want to fund the deals, doesn't do the rehab himself? What does he do, and how long has he been doing it? To me, it kind of sounds like he's a newbie himself.. In which case, you're all learning together and not from a mentor, but from the school of hard knocks. I'm not knocking that.. just saying..

Ned Carey · Answer

@Daniella Ortiz  You are kind of comparing apples to oranges. In the first example you are flipping houses and in the second you are trying to buy and hold for income.

A partner or mentor can be great but it depends on the partner or mentor. Some are good some are bad some are just trying to take advantage of newbies. Try it out it doesn't have to be a lifetime commitment. If it doesn't work out learn the lesson and move on.

My advice learn what you can and keep moving forward. Go to investor meetings, read here, and listen to the podcasts. Look at lots of properties to learn your market. Learn to evaluate deals. And as I said keep moving forward.

Nilesh Makhija · Answer

@Daniella Ortiz - Also would recommend reading How do I find a Mentor

Nereo Mendoza · Answer

@Daniella Ortiz My main suggestion is sit to discuss clearly what you and him want from this business relationship and what will be the responsibilities of both. Sometimes the expectations are completely different and that leads to problems later

If possible ask to have access to the rehab process, so you can learn: times, costs, processes, people involved, etc. But try to not slow it down, time is of the essence in this business.

Expending 10 hours on a construction site at least once in your life and/or following the purchase process (for material and labor) during a few weeks  can give you a completely different perspective of many things, that also will help you to protect your time/money investment in the deal.

You have to think for your market: how much you expect to charge for wholesale a property? how much do you expect the profit to be after rehabing the property?

For example 20% of a 25k profit is 5k, and that 25k profit seems probable after paying everybody (realtors, closing and holding costs, interests, etc) in a 90k purchase with 50k in rehab and reselling for 200k

Please correct my numbers if somebody seems something odd

good luck and lets is know how it goes

Nereo

Account Closed · Answer

I agree with @Ned Carey to maybe just give it a try. You will hopefully learn who the private lenders are, get to know some good contractors and learn about the rehabbing process.

It also sounds like you wouldn't really need any of your own money to partner with him, so you could still use your $ to try out a buy and hold.

Account Closed · Answer

Hi @Daniella Ortiz

Really solid advice here. Definitely find out more about the potential partner, and clearly definite the relationship, and put a contract in place. If you are not putting money into the deal, and you are using your time, it would be worthwhile to try one -- if everything else checks out. Best of luck!

Daniella Ortiz · Answer

thanks all!  I like the idea of partnering, I am just not sure how involved he will keep me once I find the deal...so it's might not give me any contacts.  I'll keep thinking about it. If it feels right, then ill pursue it.

Daniella Ortiz

Partnering or being used?

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