Tips to find equity partners?

Question

Could anyone share some tips on finding equity partners for small-to-medium (5-20 units) value add multifamily investments? Should you find these partners before you have a deal on hand, or should you find an opportunity and offer a partnership with returns projected after an analyzation of the property? I have heard stories of newer investors partnering with individuals with more capital by having the partner put up the money for acquisition costs, while the newer investor is responsible for any rehab and property/asset management associated with the project and the equity of the property is split 50/50 or 60/40. Is this just a rare occurrence, or would I need to be considered "experienced" to pull something like this off? For some background on me; I have not made an investment yet, but I have basic skills in apartment unit renovations, multifamily underwriting, and a small amount of capital to deploy. Loaded question(s), I know, but I would any insight - thanks everyone.

Brian Adams · Answer

@Gabe Goudreau, I have traveled down this path already and I can share some quick things that I went through, you can check out my background on this thread: I quit my CPA Job to buy Large Apartment Buildings

From my experience and since this is your first deal, the arrangement you shared of 50/50 or 60/40 would definitely be rare.

You will probably need a loan sponsor and you need this person more than they need you. Someone with experience, liquidity, net worth, etc. to get the deal done.

Be prepared as the loan sponsor will want a piece or most of your deal.

I did struggle with this at first, like why it wouldn't be a 50/50 split since I found the deal and putting it all together. I realized though that a piece of a deal is way better than zero or no deal.

For me, getting a piece of the deal, I was able to leverage and turn that into building my track record and credibility.

So much so that years later I just bought a 1,000 unit deal.

To find equity partners, you must ABM - (Always be Marketing) and BP is a great place to locate and also friends, business associates, CPA, attorney, dentist, doctor.

And for a loan sponsor, also BP is a good place to ABM.

Good luck!!

Chris Levarek · Answer

@Gabe Goudreau Credibility. You have to ask, why would someone want to partner with you? What do you look like? If I search "Gabe Goudreau" in Google, what will I find? What won't I find? If I click on your BiggerPockets profile, what will I see that makes me want to partner with you?

Good questions to ask. Build your online presence and profile to sell yourself. Know your strengths and skillset and promote them! Here are my tips to finding a partner :

• Make your goal for the next 90 days to find a partner.
• Build a Linkedin Profile. DM for tips on how to do this...AND/OR
• Make your BP Profile standout. See my profile for a possible example.....AND/OR
• Make your FB profile clean and standout. 
• Post often on BP.
• Attend meetups and network like crazy. 
• Talk to everyone about your goals and strengths.
• Make a goal to reach 1000 contacts on X platform ( Linkedin/BP/Facebook/etc)

You don't have to be on all platforms, everywhere. However, pick one or two and really give yourself some credibility or promotion. Network, Network, Network. Make goals, smash them and then make new goals.

Greg Scott · Answer

If you are finding true partners, you should find them before finding the property.  You will want to agree on many philosophical, financial, and operational issues before acquiring a property.

If you hope to find a property and then add equity partners who are not involved in the day-to-day business, you are creating a security and will need to engage an SEC attorney to create a PPM before acquiring the property.   Even if you go this route, it is advisable to start collecting potential equity partners before you start searching for a deal.  If you find a good deal and cannot close, you have destroyed your reputation with the listing broker.

Jeffrey Donis · Answer

I recommend attending different real estate events. Typically ones with a barrier of entry tend to be more worthwhile than free ones (in my experience). Another thing I will say is that any "equity partner" will want to know they are working with a solid team with a proven track record or they will trust you and believe that you can deliver. If you can build a good team around you and then go to events and let people know what you do and talk about ways you could work together, you will most likely find what you are looking for.

Tips to find equity partners?

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