How to: Approaching a partnership with little capital?

Question

Hey BP,

For those of you that have successfully done a deal with a partner(s), how can one approach a partnership deal without bringing much capital to the table?

I feel like it would almost be along the lines of finding a deal and instead of wholesaling it, find an individual that will fund the deal that you bring them for 50/50 of the profit/revenue.

Are there any other alternatives?

(Thanks!)

Corbin Wafford · Answer

Not quite sure, hah. Hence my reason for this post. Was hoping I could get some success stories or theories from some successful investors. I personally feel like finding the deal is almost half the battle, especially in the hot market we have today.

So maybe a 30/70 split?

Mindy Jensen · Answer

You're halfway there, by having investors who want to partner with you. What do you feel is a fair split?

Corbin Wafford · Answer

@Mindy Jensen Hey Mindy,

I appreciate the reply! I knew I could bank on getting some feedback from you.

I really am just trying to do my best to understand how a partnership works best. I understand that it is completely up to the individuals involved in the deal and typically the standard partnership theoretically looks like: Splitting the cost 50/50. I was curious what other alternatives could be applicable when approaching a partnership.

Reasoning behind my question: I am in the process of closing my first (duplex) home now, so I have exhausted my funds for now. Looking to do my next deal, I know where to find it, and have partners that want to do a deal together, I just do not have funds to do so right now. So looking for ways to hop back into the game, just strapped for $$.

(I have read @Brandon Turner book on investing with little to no money down. Just trying my best to articulate the context and put it into action).

Mindy Jensen · Answer

@Corbin Wafford , I've never done a deal with a partner like this before. If they are bringing the money, what are you bringing? I'm assuming you've found the deal? Are you doing any additional work like managing the flip or managing the rental?

The terms of a partnership are whatever you and the partner agree on. There are plenty of people who want to invest in real estate but want to be completely hands off. If 50-50 sounds good to you, write up those terms. If 80-20 sounds fair, and you can find someone to agree to those terms, write it up that way.

Whatever you do, in a partnership, you want everything in writing before money changes hands.

Corbin Wafford · Answer

@Mindy Jensen

Do you or any of your colleagues have any input?

(Not sure if this was posted in the incorrect section as there have been no replies)