Find my own deal or partner with a seasoned investor?

52 Replies

I have spent the past 6 months or so educating myself on REI as much as possible primarily here on BP by listening to countless podcasts, posting tons on the forums, analyzing hypothetical deals, networking with other investors, realtors, wholesalers, lenders, contractors and everybody in between. I also have a close friend who did two flips during that time frame so I was able to pick his brain and watch that process through from start to finish. Now I'm ready to take action and start looking for my own first deal.

Here's my plan and what I'm ultimately looking to accomplish:

I was fortunate and disciplined enough to build up some savings through my previous business endeavors to have as working capital knowing one day I would go eventually go into REI.  That time is now.

My primary plan is to use the BRRRR strategy to ultimately build a portfolio of SFH's and MFR's. I feel this strategy will work best for me since I can continue to recycle my initial working capital over and over again which will allow me to scale faster.

I love the whole idea of rehabbing to force appreciation so that is another reason why I feel that strategy is best for me.

I also plan to do some flips to generate more working capital that can be used to buy more cash flowing rentals.

The end goal is to build a large REI portfolio which I'm now prepared to work full-time at to ensure that I succeed.

At 34 years old I'm also still young enough and naive enough to believe that I can do it.  If there's a will, there's a way!

With all of that being said:

Would you suggest that I start looking for my own deals or that I look to partner with a local seasoned investor on a deal or two first?  The value that I would provide to them would be via my capital, my time and my sweat equity that I'm willing to invest into the deal.  This would be in exchange for their experience, knowledge, resources, mentorship and project management.

Furthermore, keeping my goals in mind, if you were me would you use the initial capital to start off slow and leverage it among several different properties or would you be looking for a larger MFR right from the start?

I'm looking forwards to hearing your feedback.  I'm either ready to start hunting for deals or start hunting for partners.

One way or the other I'm done sitting on the sidelines!  Thank you in advance for your input and advice.

@Brian Garrett

Find your own deals and while in the process, if you meet someone like-minded and can partner up, great.

As for whether you want to invest in SFH or MF, take action, start analyzing deals and make offers. Eventually you would figure out which route would work better for you.

Like you say, time to take action! good luck! 

Originally posted by @Chris T. :

@Brian Garrett

Find your own deals and while in the process, if you meet someone like-minded and can partner up, great.

As for whether you want to invest in SFH or MF, take action, start analyzing deals and make offers. Eventually you would figure out which route would work better for you.

Like you say, time to take action! good luck! 

Thank you for the feedback. Just to clarify, I plan on investing in both SFH and MFR. There's aspects of both that I like.

What I was asking is if you were me would you take your initial capital and use it for down payments on multiple smaller properties or would you use it for a down payment on one larger MFR? Keeping my goals in mind of course.

Originally posted by @Brian Garrett :
Originally posted by @Chris T.:

@Brian Garrett

Find your own deals and while in the process, if you meet someone like-minded and can partner up, great.

As for whether you want to invest in SFH or MF, take action, start analyzing deals and make offers. Eventually you would figure out which route would work better for you.

Like you say, time to take action! good luck! 

Thank you for the feedback. Just to clarify, I plan on investing in both SFH and MFR. There's aspects of both that I like.

What I was asking is if you were me would you take your initial capital and use it for down payments on multiple smaller properties or would you use it for a down payment on one larger MFR? Keeping my goals in mind of course.

Your post is well written and your investing preparation is excellent. Chris' answer was perfect. The answers to your questions will materialize as you take action and buy stuff...SFR or MF...does not matter. You've reached the point where general advice will not help much....time to pull the trigger and pivot as you learn what you like and don't like.

Your goal is to have a large portfolio; so, I'd recommend buying as large of a property that you can afford (but any size to get the first one under your belt is what's important right now).  Good luck and keep us posted.

You are thinking wayyyyyyyyyyyyy to much into it. 

Follow this formula: 

(Buy house cheap) + (Cost to renovate house to be worth more than you bought for) + (Sell to someone who will pay that) = Profit * Repeat 

@Brian Garrett most investors lose money on their first deal because they don’t know what they don’t know. By partnering with a seasoned investor you can capitalize on their experience and knowledge in a very inexpensive way. So my vote is to partner up with an experienced investor in your area and take him or her out to lunch to hear how he or she is investing in real estate. If you like what you hear, then ask what you can do to partner up with him or her on a deal and then do that. You probably won’t make much money yourself on the deal but your true profit will be what you profit by learning from an experienced investor.

Originally posted by @Mike Dymski :
Originally posted by @Brian Garrett:
Originally posted by @Chris T.:

@Brian Garrett

Find your own deals and while in the process, if you meet someone like-minded and can partner up, great.

As for whether you want to invest in SFH or MF, take action, start analyzing deals and make offers. Eventually you would figure out which route would work better for you.

Like you say, time to take action! good luck! 

Thank you for the feedback. Just to clarify, I plan on investing in both SFH and MFR. There's aspects of both that I like.

What I was asking is if you were me would you take your initial capital and use it for down payments on multiple smaller properties or would you use it for a down payment on one larger MFR? Keeping my goals in mind of course.

Your post is well written and your investing preparation is excellent. Chris' answer was perfect. The answers to your questions will materialize as you take action and buy stuff...SFR or MF...does not matter. You've reached the point where general advice will not help much....time to pull the trigger and pivot as you learn what you like and don't like.

Your goal is to have a large portfolio; so, I'd recommend buying as large of a property that you can afford (but any size to get the first one under your belt is what's important right now).  Good luck and keep us posted.

 Great advice Mike. Thanks for your insight.

Originally posted by @Chris Grenier :

You are thinking wayyyyyyyyyyyyy to much into it. 

Follow this formula: 

(Buy house cheap) + (Cost to renovate house to be worth more than you bought for) + (Sell to someone who will pay that) = Profit * Repeat 

I can understand how that simplified mindset may work for someone who is simply looking to flip a house here and there as a hobby however I'm trying to have a more streamlined and calculated plan of action which can help allow me to scale efficiently being that I'm doing this full-time now. Especially since I'm planning to buy more rentals than flips.

Originally posted by @Shiloh Lundahl :

@Brian Garrett most investors lose money on their first deal because they don’t know what they don’t know. By partnering with a seasoned investor you can capitalize on their experience and knowledge in a very inexpensive way. So my vote is to partner up with an experienced investor in your area and take him or her out to lunch to hear how he or she is investing in real estate. If you like what you hear, then ask what you can do to partner up with him or her on a deal and then do that. You probably won’t make much money yourself on the deal but your true profit will be what you profit by learning from an experienced investor.

Thanks for your feedback. Why do you suggest that I would probably not make money on a partnership deal?

If I'm a 50/50 partner with a seasoned local investor I would expect to be turning a profit and hopefully a decent one being that they have the experience, resources, team, knowledge, track record, etc.

Hey Brian, I am super excited for you! Saving up all this time is going to finally pay off. I would first evaluate your strengths and then leverage those for REI. So if you are good at marketing and can find off market deals, focus on that and use great deals you find as a way to get your foot in the door for some great partnerships. OR if you are great with people and can build lots of trust, become someone who pools money together for large transactions. Partner with a seasoned operator and use his experience to inspire confidence in others so they will invest with you.

Originally posted by @Rob Beardsley :

Hey Brian, I am super excited for you! Saving up all this time is going to finally pay off. I would first evaluate your strengths and then leverage those for REI. So if you are good at marketing and can find off market deals, focus on that and use great deals you find as a way to get your foot in the door for some great partnerships. OR if you are great with people and can build lots of trust, become someone who pools money together for large transactions. Partner with a seasoned operator and use his experience to inspire confidence in others so they will invest with you.

Thanks Rob. I'm just going to start looking for deals that fit my criteria and if a partnership opportunity presents itself in the meantime great and if not then I'll just move forwards on my own deals. I'm confident that I can figure it out on my own if need be thanks mainly to all of the great people and resources here on BP!

@Brian Garrett the reason that I said that YOU probably wouldn’t make much money on the deal is because if you partner with someone who is really good at real estate then they don’t need YOUR money. They will probably already have many streams of money to work with themselves that they pay between 5% and 16% on such as hard money lenders, private money lenders, business lines of credit, etc. so if they are really professionals they probably don’t need your money. The experience that you get is worth more than the money

There are many new investors that want to partner up with an experienced investor, throw a little bit of money at a deal (10k - 100k), and then they want to make half of the profits. Putting money into a deal is the easiest part of it. Any one with some money can do it. Finding the deal, recognizing that it is a good deal, building systems to make everything happen, and knowing what to do when things go wrong (which they usually do), is the art of investing that is developed over time with experience. That is what you really profit from when you partner with someone on a deal.  

So the question is, if the experienced investor already has his or her streams of money to use, then what do you bring to the partnership? How do you make it worth their time to sit down with you and show you step by step how to invest in real estate wisely? The only reason I could see an experienced, busy investor doing that is because they like you and are willing to take someone under their wing. But if you approach them asking to split the profit 50/50 that may come across as naïve, and unattractive for them.

With all this being said, you may decide to just do it all yourself, however, for every 1st deal success story, there are probably 5-10 stories of people who have lost money on a first deal. So in my opinion, partnering up with an experienced investor is worth more than the money you get. It is better to get 10% on your money in a deal than to lose 5k on the deal (or 100k as some people do as shared in the recent podcast by 

@JD Martin )

Hi Brian, I would suggest you try a small deal first before you jump into an MFR, would probably be the best for now. If you have enough money to buy numerous deals you should be able purchase your first deal all cash and work on the rehab part on your own. This is the best way to learn the mechanics of the deal. Partnerships are difficult and you may get caught in a bad one for your first deal, I don’t recommend it for now. Buy cheap, Rehab, sell for profit.

Originally posted by @Shiloh Lundahl :

@Brian Garrett the reason that I said that YOU probably wouldn’t make much money on the deal is because if you partner with someone who is really good at real estate then they don’t need YOUR money. They will probably already have many streams of money to work with themselves that they pay between 5% and 16% on such as hard money lenders, private money lenders, business lines of credit, etc. so if they are really professionals they probably don’t need your money. The experience that you get is worth more than the money

There are many new investors that want to partner up with an experienced investor, throw a little bit of money at a deal (10k - 100k), and then they want to make half of the profits. Putting money into a deal is the easiest part of it. Any one with some money can do it. Finding the deal, recognizing that it is a good deal, building systems to make everything happen, and knowing what to do when things go wrong (which they usually do), is the art of investing that is developed over time with experience. That is what you really profit from when you partner with someone on a deal.  

So the question is, if the experienced investor already has his or her streams of money to use, then what do you bring to the partnership? How do you make it worth their time to sit down with you and show you step by step how to invest in real estate wisely? The only reason I could see an experienced, busy investor doing that is because they like you and are willing to take someone under their wing. But if you approach them asking to split the profit 50/50 that may come across as naïve, and unattractive for them.

With all this being said, you may decide to just do it all yourself, however, for every 1st deal success story, there are probably 5-10 stories of people who have lost money on a first deal. So in my opinion, partnering up with an experienced investor is worth more than the money you get. It is better to get 10% on your money in a deal than to lose 5k on the deal (or 100k as some people do as shared in the recent podcast by 

@JD Martin )

Not sure where you are getting your stats that 45-90% of investors lose money on their first investment.  Real estate investing is not that complicated, especially for someone prepared like Brian.

Originally posted by @Shiloh Lundahl :

@Brian Garrett the reason that I said that YOU probably wouldn’t make much money on the deal is because if you partner with someone who is really good at real estate then they don’t need YOUR money. They will probably already have many streams of money to work with themselves that they pay between 5% and 16% on such as hard money lenders, private money lenders, business lines of credit, etc. so if they are really professionals they probably don’t need your money. The experience that you get is worth more than the money

There are many new investors that want to partner up with an experienced investor, throw a little bit of money at a deal (10k - 100k), and then they want to make half of the profits. Putting money into a deal is the easiest part of it. Any one with some money can do it. Finding the deal, recognizing that it is a good deal, building systems to make everything happen, and knowing what to do when things go wrong (which they usually do), is the art of investing that is developed over time with experience. That is what you really profit from when you partner with someone on a deal.  

So the question is, if the experienced investor already has his or her streams of money to use, then what do you bring to the partnership? How do you make it worth their time to sit down with you and show you step by step how to invest in real estate wisely? The only reason I could see an experienced, busy investor doing that is because they like you and are willing to take someone under their wing. But if you approach them asking to split the profit 50/50 that may come across as naïve, and unattractive for them.

With all this being said, you may decide to just do it all yourself, however, for every 1st deal success story, there are probably 5-10 stories of people who have lost money on a first deal. So in my opinion, partnering up with an experienced investor is worth more than the money you get. It is better to get 10% on your money in a deal than to lose 5k on the deal (or 100k as some people do as shared in the recent podcast by 

@JD Martin )

 Completely understand your points. My perspective was that not all experienced investors have capital laying around.

Originally posted by @Nelson Hernandez :

Hi Brian, I would suggest you try a small deal first before you jump into an MFR, would probably be the best for now. If you have enough money to buy numerous deals you should be able purchase your first deal all cash and work on the rehab part on your own. This is the best way to learn the mechanics of the deal. Partnerships are difficult and you may get caught in a bad one for your first deal, I don't recommend it for now. Buy cheap, Rehab, sell for profit.

I was originally planning on doing exactly what you said but I've decided that I don't want to have all that cash (purchase & rehab) tied up into one single deal. For my particular goals and for the ability to scale it makes much more sense to leverage my initial capital. Also as mentioned before I'm not planning to sell I'm planning to hold onto them as rentals. Flips will be more of an occasion to generate working capital. For me it's all about cash flow and not having much money tied up into any one particular deal hence the reason I've decided that the BRRRR strategy is most attractive to me.

@Mike Dymski The comment that I made wasn’t meant to be  statistically accurate.  The comment was to share that more people who try out investing on their own lose money on their first deal than gain money. And that is just  The experience that I have had and that I have seen others have. It takes some experience to recognize when a deal is a good deal or not. Most new investors  have a hard time recognizing the good deals from the ones that don’t make any money But they are really eager to get started so they jump in to a deal and may break even or lose money.

@Brian Garrett  The suggestion that I gave was more for a flip than a buy-and-hold. You may not want to partner With someone on the buy and hold deal and that is understandable. However,  once you find a property that you believe is the deal I would encourage you to  consult with an experienced investor in the area that the property is in to give you some advice on the particular property. They may be able to see things that you may not see or be more aware of the area and you. We purchased some properties in Indianapolis in 2016. Half of the properties are doing well but the other Half or not because they are not in as good of neighborhoods. But this is something that I didn’t know because I didn’t consult a local investor About the properties. Expensive lesson learned.

Originally posted by @Shiloh Lundahl :

@Brian Garrett  The suggestion that I gave was more for a flip than a buy-and-hold. You may not want to partner With someone on the buy and hold deal and that is understandable. However,  once you find a property that you believe is the deal I would encourage you to  consult with an experienced investor in the area that the property is in to give you some advice on the particular property. They may be able to see things that you may not see or be more aware of the area and you. We purchased some properties in Indianapolis in 2016. Half of the properties are doing well but the other Half or not because they are not in as good of neighborhoods. But this is something that I didn’t know because I didn’t consult a local investor About the properties. Expensive lesson learned.

Your example is the main reason why I'm only interested in investing locally where I know the areas. Thanks Shiloh.

Brian, You can do the same thing in a buy and hold situation. As of now you are talking a lot about leveraging your money but while it sits in the bank you earn or learn nothing. Buy your first deal cash so if you get caught in an unforeseen you don’t have to dish out 10-12% hard money payments. Rehab it yourself so you learn the real timelines of doing things and the difficulties presented along the way (example: Permitting). I’m a contractor with vast experience in Rehab for investors, large funds and banks, Timelines are always under calculated. Once you have your house looking pretty then you find a bank that will cask you out. At this time you will know exactly the cost of doing business and you can calculate how much you will cash out to still have the rent cover the new mortgage. I personally like to leave equity in my properties since a real estate market can change at any time. Get started ASAP!

Originally posted by @Shiloh Lundahl :

@Brian Garrett the reason that I said that YOU probably wouldn’t make much money on the deal is because if you partner with someone who is really good at real estate then they don’t need YOUR money. They will probably already have many streams of money to work with themselves that they pay between 5% and 16% on such as hard money lenders, private money lenders, business lines of credit, etc. so if they are really professionals they probably don’t need your money. The experience that you get is worth more than the money

There are many new investors that want to partner up with an experienced investor, throw a little bit of money at a deal (10k - 100k), and then they want to make half of the profits. Putting money into a deal is the easiest part of it. Any one with some money can do it. Finding the deal, recognizing that it is a good deal, building systems to make everything happen, and knowing what to do when things go wrong (which they usually do), is the art of investing that is developed over time with experience. That is what you really profit from when you partner with someone on a deal.  

So the question is, if the experienced investor already has his or her streams of money to use, then what do you bring to the partnership? How do you make it worth their time to sit down with you and show you step by step how to invest in real estate wisely? The only reason I could see an experienced, busy investor doing that is because they like you and are willing to take someone under their wing. But if you approach them asking to split the profit 50/50 that may come across as naïve, and unattractive for them.

With all this being said, you may decide to just do it all yourself, however, for every 1st deal success story, there are probably 5-10 stories of people who have lost money on a first deal. So in my opinion, partnering up with an experienced investor is worth more than the money you get. It is better to get 10% on your money in a deal than to lose 5k on the deal (or 100k as some people do as shared in the recent podcast by 

@Jd Martin)

OOf! LOL. No, that's a good example. If I had had some experience with me from the beginning I could have avoided a lot of mistakes. I think I mentioned this in the podcast, but one of the things that probably hurt me was having a bunch of my own cash to spend (at least at first) - no one had to vet the land purchase, the ARV, days on market, or any of that kind of stuff. When there were mistakes in those areas (or not done at all), there wasn't any backstop to tell me "Hey, you might want to look at a different lot".

Hi Brian, I am interested in following your progress. It seems like you have a good head on your shoulders!

I'm on a similar path down in north Fort Lauderdale area. We should connect sometime!

Best of luck! 

Originally posted by @Nelson Hernandez :

Brian, You can do the same thing in a buy and hold situation. As of now you are talking a lot about leveraging your money but while it sits in the bank you earn or learn nothing. Buy your first deal cash so if you get caught in an unforeseen you don’t have to dish out 10-12% hard money payments. Rehab it yourself so you learn the real timelines of doing things and the difficulties presented along the way (example: Permitting). I’m a contractor with vast experience in Rehab for investors, large funds and banks, Timelines are always under calculated. Once you have your house looking pretty then you find a bank that will cask you out. At this time you will know exactly the cost of doing business and you can calculate how much you will cash out to still have the rent cover the new mortgage. I personally like to leave equity in my properties since a real estate market can change at any time. Get started ASAP!

I understand what you're saying but I still don't want all my cash tied up into a deal waiting for the rehab to finish so I can pull it back out via cash out refinance. I want to have liquidity so I can pull the trigger should other deals arise.

@Brian Garrett

BRRRR is great in theory. It's a matter of IF you can find one to buy that can BRRRR. Prices have gone up so much in the past couple years...

How are you going to find the deals that will work in 2017?

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