I'm a newbie to REI. I bought a house of my own just a little over a year ago, and I'm eager to start buying investment properties. I have quite a bit of equity in my house, so I'm in the process of setting up a HELOC to help fund some of my deals.
While I'm anxiously waiting to get that all set up (I need to take care of some minor repairs and updates after renting to my brother before I can get an appraisal), I am eager to be searching for deals; I really enjoy the hunt (though I think there are a lot of ways I can improve my searching techniques). The problem right now is that I don't have a lot of cash that I am ready to tie up into a deal, so I was hoping to network and make an arrangement, specifically for a house flip in which I find the deals, do the legwork to get the repairs done, then get it sold, while the partner finances the deal and manages everything to make sure his/her money is well-invested.
My question is: What kind of partnerships have you guys had that you found beneficial, and what were the best ways that you found to arrange to work with a partner? I'm looking specifically to partner on a house flip so that the partnership doesn't have to be long-term. I look forward to hearing from everyone.
@Daniel Howard I am coming out of a "partnership" between my wife and I and 2 other partners. It has not gone well. We thought "they" would be good financial partners, as doctors. In fact, it has lead to many issues and the divorce is not going to be amenable. If you can find a way, do it all yourself.
By doing it yourself, you know 1) your limits, and you learn a lot about the amount of risk you are willing to take on & 2) you don't need a partner. You can get partners in the form of lending institutions on your own. You can find entities that will do buy-fix-flip deals with you and you will learn the system of what you can take in as an investor.
Do your first deal on your own, then you can decide if you "need" the partner. Best of luck to you!
The easiest way to set up a partnership where the responsibilities are clear is to bring in a partner as a private lender.
There are professional private lenders known as hard money lenders. Good ones can be like partners where they charge you a high interest rate based on the assumed financial risk and can help you with vendors and other resources. But at the end of the day they are the lender and you are the owner.
Like @Jack Bobeck says, once you understand the risks involved, then it might be more appropriate to ask folks without professional real estate experience.
Also, sellers make excellent financial partners.
@Daniel Howard don't let someone else's good/bad experience persuade/dissuade you from doing what you think is going to work for you. Ultimately, you're only going to know by doing. It's good to read about other's experiences, but there's no experience quite like doing it.
I know people who have had great partnerships.
Do you know anyone with money? Someone who likes to take on investments? Approach them with properties in mind, having done all the work already, and lay out exactly what this investment looks like. Make it a "turn key" investment for them, where all they have to do is provide funds, and they'll get more back. If that doesn't work, bring those same properties/investments to a real estate meetup, or even connect with investors on BP.
As @William Hochstedler mentioned there are hard money lenders, but surely you know of those. If your scenarios are solid, and you believe in them, take that road, but it doesn't have to be option 1 at all.
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