Finding a Partner to Multiply Your Investing Ability

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Finding a Partner to Multiply Your Investing Ability

Dale Osborn
Mobile Home Investor · Spanaway, WA · Member since 2008 · 1k+ posts · 578 votes

Many people involuntarily find themselves involved with real estate investing. They stumble around making all kinds of mistakes as they are looking for guidance or training to help them along their path to wealth. Sometimes they find assistance - other times they continue to stumble around the world of investing. At some point they reach a stone wall and realize that to make any further progress - they need to find someone to partner with. If you were in their shoes looking for a partner what would you look for? I have put together some items below, but know there are probably many more aspects to look at. Here is the skeleton assembled so far:

1. Skills of each potential partner
2. Credibility of each partner.
3. Trustworthiness of each partner.
4. Assembled team to do repairs/rehabs.
5. Knowledge/Experience of each partner.
6. Credit worthiness of each partner.
7. Who gets to be in charge to make the hard decisions?
8. What kind of percentage splits?

These are a few items to look for when looking for a partner - what would you add to the mix?

Along the same line, for a good partnership to work, it needs to be well outlined in writing before even doing anything else. If you cannot agree on how things will be set up it would be a waste of time being in a partnership with that person.

What would you place in your real estate investing partnership agreement?

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Ibrahim Hughes
Real Estate Consultant · Bloomfield, NJ · Member since 2010 · 2k+ posts · 1k+ votes
14y
Originally posted by Chris Gabriel:
This is really interesting, because recently I've been thinking a lot about having a partner to share the workload, and grow the business. The problem is that I wouldn't have the faintest idea as to where to look. My guess is that most partnerships form on their own from past dealings with each other, as opposed to seeking out someone.

Those of you who have partners, how did yours form?

Chris - I just formed a new partnership with someone I wholesaled a deal with. I found the deal (my specialty) and he found the buyer. I can find buyers but I'd rather spend my time finding distressed sellers and resolving title issues. I feel that when people are able to focus on what they do best while developing (at their own pace) what they're not necessarily 'great' in, I think they can make more money and be more productive.

I didn't seek out my new partner nor was I looking for one. But strangely while shopping my wholesale deal I found myself wasting my time in a meeting with 2 clowns who swore they were ready to close only to find out THEY wanted to wholesale it. And do it retail at that (smh)! But one of the clowns, ironically, gave me the idea of partnering. I left the meeting and the first call I made was to my new partner who actually annoyed me when I first spoke with him 2 days before. I thought he was a bit rude at the time. Come to find out that was more of his strategy and personality when he deals with other investors. He's actually a really nice, spiritual and family oriented guy. And I felt his 'rough-around-the -edges' approach to the business would compliment my nice, patient and easy demeanor (it works great with distressed sellers). And honestly I grew a little tired of the Dr. Jeckel/Mr. Hyde persona I often find myself taking when wholesaling.

So far our partnership is great. We have a few more wholesale deals on the table we're working together plus planning and building our infrastructure. I see big things for our partnership in the near future. And it feels great to exchange ideas with someone experienced and visionary yet coming from a slightly different perspective at times. And I can finally concentrate on buying properties and really structuring that end of the business. It's tough being a 1-man operation. And I don't know too many people who are really successful at it. Most successful people I know in business have at least 1 partner.

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  • Account Closed
    Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
    14y
    Originally posted by Aaron Churnick:

    So quick math, Totally pulled from thin air. If guy A can find 20 deals a year, and wholesales them for an average of 3,000 a deal. He makes a living at 60k/yr.

    If A+B partner, Guy A needs to find lets say 30 deals a year (50% increase) and guy B needs to sell them for 4,000 profit each to make the same money. I'm sure this is possible, but doesn't seem that probable. I also don't think they come to the table with equal skills. Guy A can make a living on his own, Guy B can't.

    I'm Guy A. I can find deals in places most others can't. I still need buyers, but even if I don't sell for maximum value, I'm in business. Guy B is everywhere in my farms. They rely on what's readily available on the MLS (mostly REOS) and easy to identify FSBOs. They need me today because inventory is low and their usual resources are dried up, but I don't "need" them. Not a great set-up for an enduring partnership.

    That being said, I do have fantasies of someone agreeing to pay me my annual net to market, find, and manage their deals until it closes (all on their dime). But that wouldn't teach me anything, as I need to sell the deals to know what buyers like and need. And there's no replacement for rehabbing when it comes to learning costs and variables.

    Ibrahim S Finding the right solution to working with Spanish speaking sellers is huge for me right now. It's something that I need to put into place. Not sure about a partnership for that. But definitely need a working relationship with someone who can speak Spanish and knows and understands FSBO RE transactions.

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  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    14y
    Originally posted by K. Marie Poe:

    Ibrahim S Finding the right solution to working with Spanish speaking sellers is huge for me right now. It's something that I need to put into place. Not sure about a partnership for that. But definitely need a working relationship with someone who can speak Spanish and knows and understands FSBO RE transactions.

    That was something that resonated with me as well. For me, it's more about communication with contractors, which, while it may not seem like a big deal, would likely save me a LOT of money every year.

    The guy who runs my main contracting crew (painting, sheetrock, siding, handyman stuff, etc) is now a good friend of mine and he's Hispanic (he speaks Spanish), which has helped me tremendously with buyers, sellers and contractors. Though I hate relying on him to communicate for me all the time. It would be nice to have a partner who could do this.

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  • Ibrahim Hughes
    Real Estate Consultant · Bloomfield, NJ · Member since 2010 · 2k+ posts · 1k+ votes
    14y
    Originally posted by K. Marie Poe:

    Ibrahim S Finding the right solution to working with Spanish speaking sellers is huge for me right now. It's something that I need to put into place. Not sure about a partnership for that. But definitely need a working relationship with someone who can speak Spanish and knows and understands FSBO RE transactions.

    K. Marie Poe - With the increase in numbers of Hispanics growing in the US as buyers, sellers, contractors etc. I see the need to address this as only growing. Before my partnership I thought of simply getting a Spanish speaking Assistant for the office. I'm still going this route at some point but the Spanish speaking partner is someone I can rely on who can address this in the field where most of my money is made.

    Plus I hate when business almost grinds to a screeching halt just because I'm on vacation. To have a partner back at base and only being bothered when absolutely necessary is my own fantasy. Again, my sanity (and thus my spirit and good nature) above all else.

    BTW - I thought I remember you mentioning a partner back on CRE, no?

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  • Dale Osborn
    OP
    Mobile Home Investor · Spanaway, WA · Member since 2008 · 1k+ posts · 578 votes
    14y

    Thanks for all of those who had some great inputs and were able to stay on the original subject. There are always some who get off on tangent personal chit-chat that does not pertain to what the intent of the thread was for.

    Thanks again.

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  • Ibrahim Hughes
    Real Estate Consultant · Bloomfield, NJ · Member since 2010 · 2k+ posts · 1k+ votes
    14y
    Originally posted by Dale Osborn:
    Thanks for all of those who had some great inputs and were able to stay on the original subject. There are always some who get off on tangent personal chit-chat that does not pertain to what the intent of the thread was for.

    Thanks again.

    Granted - but I think many people benefited from the 'chit-chat' as it still related to the original subject. And I believe it was your 4th post on this subject Dale (in your response to Chris Gabriel) that led some (at least it did for me) to believe that we could change the 'format' of the discussion by veering away from the the 'list' format and speak in a more 'narrative' style.

    1Reply
  • Account Closed
    Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
    14y

    I thought this thread was 100% on topic as everyone posted about their experience or understanding of partnerships. Some have them, some don't, some want them and some don't want them. I benefitted from the chit chat.

    Ibrahim S I think the partner you are referring to would be the live-in one, the one that does all my tech support, payroll and the corporate taxes, and A LOT of the driving. He's the father of my children as well. It's nice when partners work out like that.

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  • Ziv Magen
    Fukuoka, Fukuoka · Member since 2012 · 148 posts · 29 votes
    14y

    Completely agree with those points, for me my partnerships are all about penetrating markets (language or otherwise), learning and benefitting from others' skills, not re-inventing the wheel in a less efficient and more consuming way, and being able to free myself (regularly or temporarily) for "higher" pursuits more directly tied to my skillset or needs (in my case, managing clients, getting new ones, creating new partnerships, and of course private pursuits). If you find the right people with the right mindset, which compliments and doesn't clash with yours, its a win-win for all involved - and as Ibrahim perfectly put it, there's so much more to it than maximizing profit.

    1Reply
  • Luis Castillo
    Real Estate Investor · Whittier, CA · Member since 2012 · 92 posts · 19 votes
    14y

    Dale, on top of all the good information you have received here I would definitely add an exit strategy which would include a time frame to sell, refi or just revisit our original agreement to see if there are any changes we both agree on.

    Also in dealing with the death of one or both partners, I have heard that life insurance can be purchased to help with the buyout if necessary upon the death of one of the partners.

    2Reply
  • Dale Osborn
    OP
    Mobile Home Investor · Spanaway, WA · Member since 2008 · 1k+ posts · 578 votes
    14y

    Having a definite exit strategy and deferring risk with insurance coverage are some nice points to have in your agreement or overall plan.

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  • Dale Osborn
    OP
    Mobile Home Investor · Spanaway, WA · Member since 2008 · 1k+ posts · 578 votes
    14y

    Ann Bellamy You have added several key points to be addressed:

    Trusting each other and all working towards the same end goal.
    The time commitment of each partner to accomplish set goals.
    Everything in writing before anything else takes place.
    Exit strategy - one deal or multiple properties over a set time period.

    Adding these to the mix will make for a pretty strong agreement.

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