Finding partners to fund deals

21 Replies

@Wesley Dean First rule is to have good partners. Second rule is to read all of the books you can on syndication and JV. If you are bringing great deals to your partners, they won't cut you out of them. They want to invest in them. If they try to cut you out, find new partners. That is not a game I play or any of my partners play. Hope that helps!

As long as you develop the relationship with the seller, the deal should be safe. As long as the access to the deal goes through you, the deal should be safe. But sure, some investors will try to backdoor it, but not the good ones. If you bring a good deal to the table and have done all the research and are correct on ARV and repair values, an investor will appreciate that your deal and numbers are solid and will find a way to JV it with you or some other config.

Having options is the best defense.  If your investors are fungible and/or you have the ability to execute on your own you can control your projects more, which is a dominant reason you should be growing your capital base as much as you're growing your ability to locate quality deal flow.  Each of these are very important in being a quality sponsor and where sponsors get in trouble is when either is much out ahead of the other.  

Matt Faircloth's book on Raising Private Capital sounds like a great next step for you.

You may also consider wholesaling your first few deals to work on developing your skills and building your funnel.

@Tyler Weaver

Thank you Tyler. I will definitely be giving the book a try. I love the wholesaling recommendation! I’m working on getting that ball rolling as well! I really appreciate your input. I’ll let you know what I think about the book after reading, thank you again.

@Wesley Dean I am in to SF new construction..

Below is one of my listings, building 3 more of similar homes..

@Wesley Dean I would never, ever bring a deal to someone that is not under contract. There really isn't a point to do that as it will burn your credibility with the buyer, which is your long-term relationship. It's also the way to get the seller to sign by making sure you let them know you can not take this to vetted buyers without having it under contract.

@Jonathan Greene

Thanks Jonathan!!

Your answer definitely helps.

With that being said, am I able to get the deal under contract without a pre-approval?

I’m looking at a 16 unit complex for $1M. I wouldn’t qualify on my on. In your experience, do you think a seller would be willing to go into contract with a person who can brokage a deal?

@Wesley Dean yes in some ways as most wholesalers are selling the idea of transferring the contract to an end-buyer and don't always have their own pre-approval to close the deal or cash, but I do think long-term best practices is to have that set and buyers you know can close or a big list. In this case, with that price point, you have to remember that your reputation is at stake so if you put it under, you want to know you have an end buyer. What you can do is float the idea and metrics to buyers without disclosing the address or town to get an idea if they will take the deal down if it is as you say.

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