What do you look for in a potential partner on a deal?

Question

I'm having a little trouble getting my first deal under my belt and am thinking about partnering with a more experienced investor. As experienced investors, what do you look for in a potential partner on a deal? I know I'd have to bring something to the table but I don't have cash. I can provide labor, perform some due-diligence checks (I have 10 years experience in the title industry), check up on progress/contractors, etc. What advice do you all have? Thanks!

Jim Viens · Answer

Thanks, Bill Gulley for the encouraging words. It means a lot to me coming from a veteran like yourself. Here's to making 2015 a great year! :)

Bill Gulley · Answer

Find someone who can spell too!

Jim, you're in a good market area and there are tons of investors to network with in KC.

You have RE skills, title work, meeting and working with people, if you did closings then you're somewhat familiar with what lenders are doing, if you did construction disbursements then you know construction stages, material use, lien waiver issues and probably code and techniques. You're no Spring chick, you have a mature business sense that youngsters may not have. All of that's huge!

I'd bet there are rehab guys, contractors that are looking for work and to make more money just as there are here, they have money. What they don't know so well are approaching owners, valuation, title issues, getting a contract signed and taking a seller to settlement, they can bang out the rest with a hammer!

Good partners compliment each other, they have defined areas of responsibility and duties to perform, they have different areas of expertise and they need to trust the other's judgment.

Trust is required, are they honest, do you have similar levels of integrity, similar ethical outlook, are they financially responsible even if they aren't loaded? Or, are they an inch from bankruptcy that could effect your interests?

No such thing as an informal partnership, keep it business like and ensure both are secured as to their contributions. Write down your goals, when and how to agree to sell at what price or on an offer, agree on how to buy out the other incase someone drops dead or hit by a bus. What happens if one partner can't perform or won't for some reason and how will that duty be carried out?

I've never seen two partners agree on everything nor will one not think they do more than the other, so address that, it's human nature and the main reason partnerships break up and have issues, especially when it comes to money, best to clear that up before hand.

Have reasonable expectations, not every deal will be a homerun.

Value yourself and the partner fairly, what would it cost the other to have what you do from some other source? Accounting, contracting, chopping wood all has a value that can be found in the market, cost out your contributions, then look at an example as if it were on a % basis, what is left over is a profit to be split.

A money guy is not always entitled to more than 50%! No one is going to charge me another 10 or 20% because they use their money, I have money and can get money, so what they bring is valued at my cost of replacing that contribution. Don't let some money guy cut in for more than his contribution is actually worth to you. After that, agree to a split.

Good luck! :)

Franklin Romine · Answer

Find someone with common cents... and that doesn't B*tch.

Frank

Jim Viens · Answer

And you, too, @David Wooten !

David Wooten · Answer

@Jim Viens

Thanks for the quick response!!

I've started trying to network myself.

I was listening to one of the podcasts (first one I think) and one of the pieces of advice was to make yourself useful to someone whose already doing what you want to do locally.

Hopefully it goes well.

Good Luck to You!

Jim Viens · Answer

@David Wooten My first deal is in the works now (pending close) but boy is the title a mess. I'm still looking for deals and have viewed quite a few properties. I'm considering going the route of hard money for financing and may couple that with a partner to complete a deal in the future. Through my networking I've come across a few folks I would trust to partner with and one has actually said he'd consider it if I found a good deal. So I guess it really comes down to networking. But I intend to be VERY careful and vet any potential partners quite thoroughly before jumping in with them.

David Wooten · Answer

@Jim Viens

Did you find the solution to your initial post somewhere along the line?

I'm curious to know myself since I'm in a similar predicament.

Thanks!

Joe Villeneuve · Answer

First look to what you lack, and thus need, then show the partner the money.

Joe VilleneuveREcapSystemA2REIC

Nilesh Makhija · Answer

@Jim Viens - All the best in your future endeavors.

Jim Viens · Answer

Thanks for the quick reply @Nilesh Makhija . Right now I'm looking to partner just on this first deal to help me overcome the inertia of just sitting here looking at "potential" deals. If the relationship works out I would consider working on further deals together. As far as the "why" I'll answer with my short- to long-term plans: I'd like to build up some cash savings as a buffer against financial emergencies for my family...then pay off some debt, followed by paying for college for my 6 kids..then funding for my wife's and my retirement...all while having enough money left during that time to do some fun things with my family. To get there I'm wanting to build up cash from flips/wholesales in the short term then transition into building a rental portfolio for passive income.

What do you look for in a potential partner on a deal?

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