What do you look for most when considering a money partner?

Question

Do you look for in-the-trenches participation or more of an inactive silent partner role?

John Arendsen · Answer

@Brenda Cassady, Great comment! Thanks. However, it's not them that's nervous. Actually I'm not really nervous either. I'm just wondering what would be required of me as a "Hands on" partner. If it means committing to a 40+ hour work week..........sorry, been there and done that for the past 55 years. However, I wouldn't mind showing up on a regular basis when I'm in town for a few hours a day.

In all reality I can put money into the stock market, buy some tax dererred munis or purchase more properties and put them in my rental portfolio to enhance my passive income. But the idea of actually being a little active in the biz kinda intrigues me.

When you look at guys like T Boone Pickens who didn't make his first billion until he was in his 80's and still works a 40=60 hour work week, or Warren Buffet who really didn't become a billionaire until he was almost 70 and hasn't slowed down much, or even the "Colonal" who was 90 and working full time when he finally made his millions one can't help but think that at 70 there's still a lot of work to do.

I'm just not one for sitting around doing nothing while there's still so much to do. My wife and I love our travel opportunities and I love to surf. But I don't golf or fish and I can only surf about an hour or so a day so that leaves me with a lot of time on my hands. I've always been productive and might get a little depressed if I wasn't doing something creative and productive.

Ned Carey · Answer

@John Arendsen there is no one right answer. In general I would say the  more experienced an investor is, the less likely he will want a "money partner" to be meddling around in the business.

A brand new investor, on the other hand,  may want a partner with more experience that can help work through the deal

Grant Greene · Answer

John:

Good morning, and welcome to BP! Here's some food for thought:

Before you make your first investment, meet with a mortgage/financial professional. They'll ask you to share your short- AND long-term goals, and then they'll help you construct a plan that will do two things:

1. Achieve your short-term goals that will produce proceeds and resources that will,

2. Give you the wherewithal to pursue and achieve your long-term goals

Many investors start off "too hot", and they either overdevelop their first property or they spend their money too fast: either of these behaviors will stop you dead in your tracks, and you probably won't even be able to achieve your short-term goals - and you certainly won't have the resources to pursue your long-term goals. Since you're not paying a mortgage pro for consulting, it's in their best interest to give you a solid plan so you're successful.

I wish you the very best!

Grant

Bryan Hancock · Answer

1.  Someone that is an accredited investor

2.  Someone that will leave me alone and let me run the project or business

Brenda Cassady · Answer

John, hands on means you might want changes of some kind. I understand how they can be nervous about it.  When you meet just be sure to express that you like how successful there business is and that's why you want to invest with them, to put them at ease.  You may also want to outline what role hands on hands would entail.  hope I helped, Brenda

John Arendsen · Answer

@Brenda Cassady, Big thanks! I'm looking at the possibility of investing into an existig property management company that's been handling a number of our buy and holds. He's intimated that he would like to have a hands on partner/investor that would be willing to take a more active role in the day to day operations of the business.

At 70 years old I'm not looking for nor interested in a 2nd career by any means. In fact my wife and I travel extensively so I'm not sure what he really means by "hands on" but I will be finding out when we meet to explore the opportunity in more detail.

But it's a very successful property management company with lots of prime residential, mixed use, commercial/retail and even some mobile/manufactured home parks/properties in the portfolio. Many of them with long term leases and/or very long term clients i.e. doctors, dentists, attorneys, etc. who don't tend to move around much.

From a business standpoint the deal pencils very profitably and the cash flow is very good. He's currently making in the high 6 figures to low 7's per year but he works his ars off to do it as he operates the business by himself with the help of his on staff, adm asst's, office manager, small fulltime light maintenance crew and an array of licensed contractors who he's been keeping busy for years which makes the deal evermore appealing and enticing.

It's an interesting way and place to park a chunk of dough because thre's really no collateral other than the long term signed leases which are certainly a value added.

Brenda Cassady · Answer

John,

great question.  I don't mind a hands on partner.  I am use to more of a silent partner

on my deals.  With having many years of experience there is a comfort level in knowing that

I can complete projects from start to finish.  thanks, Brenda

What do you look for most when considering a money partner?

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