Finding Business Partners Who Are Serious

30 Replies

So, as we all know, real estate investing tends to be a very high barrier-to-entry venture, and therefore having partners who can invest with you is very much desirable. However, finding people who are more than simply tire-kickers, and/or who you can trust is very hard in and of itself.

Recently, I have had five separate people all express an interest in going the distance in investing, but it turns out every single one of them was simply riding the wave of energy I was putting into it. And frankly, carrying all that undertow of people who are jokers and not actual aces is sucking the wind out of my sail.

So the question is, what techniques do you guys use in order to find investing partners who are actually serious about partnering with you? So far, Bigger Pockets isn't doing the trick either... And I'm quite frustrated with doing this on my own.

Picking a partner is probably one of the more difficult things to do. Some folks on here may partner with anyone that brings cash to a deal, and that may be fine depending on the circumstances, but my read on your post is for a more long-term engagement with someone that is more than a bank.

For me, I've only found one person I'd entertain a partnership with. To get to that stage, it took over a year of knowing him professionally and then as a friend.  At first, we worked together professionally for a period of time. We were able to gauge each other's working habits, skillsets, and resumes.

He's actually invested in real estate. This means he isn't someone I had to convince that real estate was a life altering path. There is no illusion here. He will proceed with his investments irrespective of my choices.

He defers to reason. A good partner will defer to reason, which means they aren't bullheaded. Their also not a pushover. So, when you find some random guy on BiggerPockets and you convince them that real estate is the right path, they might be a pushover and just take whatever you say as gospel. If they do that, that's a big indicator that they aren't interested. Also, it shows that they aren't going to contribute any ideas.

Naturally, I suggest linking up with your local real investors association. When you're there, you can network and see if that's an avenue to connect/partner with someone. You want to link up with different professional associations as well - not just real estate investment. You can meet plenty of professionals that may be interested in crossing over.


Finding partners on the internet is difficult. Of course, there are plenty of folks that succeed in that venue, though. I think it takes a lot more internet networking to even assess whether someone would make a good partner or not.


@James Galla Oh this is so very true! But when you filter your options to the highest degree you can think to do (and I'm still working on getting better at this!), it gets frustrating when you still find tire-kickers.

For instance, I was talking to an Army Captain who works as a research analyst about real estate. He claimed to be interested, told me what his target property types were, how he wanted to structure a joint business plan, and then suddenly stopped talking to me.

But you guys are right. It's going to take a lot of looking to find the true diamonds in the rough. The best way to show others that you are serious is indeed to start investing yourself. You have to follow the Leeroy Jenkins method sometimes (so long as you have planned well ahead of time!).

Or perhaps the Bill O'Reilly method of doing it live.

Originally posted by @Payton Pearson :

So, as we all know, real estate investing tends to be a very high barrier-to-entry venture, and therefore having partners who can invest with you is very much desirable. .

Curious as to what exactly you want a partnership to do for you?  Capital? Labor?  Define what it is and go to where they are. 

There are ways to optimize others' capital and talents without a full blown partnership.  I have a private lender and a quality  laborer or 2 I pay or barter services with.  

The wrong partnership to me represents a greater risk than benefit, but I may not be seeing what you are trying to accomplish. 

 

@Steve Vaughan  The primary thing I need right now is capital. I have property managers and general contractors doing great work for me already, but I do not have the capital to invest in bigger properties that offer greater returns at the moment. I have the ability to invest in smaller multi-family properties here in the local area, because property is generally cheap and halfway decent here, but I'm looking to grow rapidly and go from 4-unit properties to 16-unit properties or larger.

Business plan has me buying 2-4 unit complexes for the next 3 to 5 years, then scaling. But if I can go faster without redlining and potentially blowing a gasket, then I will.

@Payton Pearson Other than just wanting to scale faster for momentary purposes (I suspect), why the rush? This market feels a little dicey to me. I’m still buying, but in a regular manner, I will certainly get a more pressing desire to scale when I feel like I am buying things at a discount.

Here is a cool tip for finding a partner. I found one this way. I put a property under contract with a tired ll (of this property at least), we chatted a bit about my plans for the property, I shared my real estate strategy, and she said, “hey crazy question, do you want to partner?” Basically, my tip is to talk with property owners. She lives in a different state and had an add on Craigslist. Property owners are already in the game. That partner and I have now bought multiple properties together... Perhaps call on a property you have 50% of the money on (or whatever percentage you’ll need), that you want to buy, and start chatting up the owners about what you’re trying to do.

@Jonathan R. My goals require that I grow extremely aggressively. Any way I can expedite my growth without compromising my financial stability is highly desired.

Your cool tips is a good idea, thank you! I'll definitely work on doing that more often. Though I have done some of that already.

Originally posted by @Payton Pearson :

@Steve Vaughan The primary thing I need right now is capital. 

I call my capital people lenders, not partners.  They get a mortgage on the property and receive interest.  I don't have to get approval from them for anything  or have a sit down over paint colors or countertops. 

As Jonathan mentioned, my best lender is a previous seller, too.  He carried a contract for me on a 7-family 14 years ago. 8 years or so in, lending to us was his idea.  He likes fixed rate 10yr terms.  Tough on cash-flow, but good rates and no fees.  I know others locally that lend on ground-ups or flips.  Tougher terms and 2-3 points, but not equity. They do get in your business though. 

I'd rephrase your statement from 'what I need right now is capital' to 'what would be nice to grow faster (in this frothy market) is capital'. You want it, not need it. 

Hi Payton,

If [IF] they have the available money and they are not interested, it might be either the deal seems too risky for them, or they do not understand it completely, or they do not trust you enough to make happen what you say you will make happen.

If every girl you asked to the dance would go with you--you'd be James Bond. In in real life it's a numbers game...you just need to keep weeding through them until you find your blade of grass so to speak.

Good Luck!

Look at it this way.. you see all the syndicators on this site.. or those wanting to syndicate.  as opposed to @Steve Vaughan method of choice of simply having a first position lender .. syndicators raise capital from others .. other wise how do they get to 2 thousand doors on their own ?  now back into what syndicators give their investors.. 

its usually a nice pref interest rate and a pretty big Majority of the up side equity.. like 70/30 to 80 /20 skewed towards the investor..  Ergo the need for scale and massive amount of doors its the only way the syndicator can really build their net worth.. 

So if its capital you need and you have the financing in place then you need a capital partner..  And those are many times starting out family and friends and its not uncommon for them to put up the cash and take half the deal..  

this usually is an issue for those starting out as they just don't see the value in giving up half the deal.. So they get stuck looking for that unicorn investor.. keep in mind with lower price point properties investor may just do it themselves. 

So to start and scale I think you need to be like the syndicators the majority has to go to the investor .. that's why they raise millions.. everyone has a great idea and a great project that is going to be wildly successful.. so there is huge competition for investor dollars.

@Jay Hinrichs indeed, and I have partnered with some of my family on one property (soon to be two), but their funds are limited. And I am indeed giving my family very healthy ensured profits (something like a 28% ROI year-over-year?) that will continue in perpetuity, with me doing all the work.

Originally posted by @Jay Hinrichs:

Look at it this way.. you see all the syndicators on this site.. or those wanting to syndicate.  as opposed to @Steve Vaughan method of choice of simply having a first position lender .. syndicators raise capital from others .. other wise how do they get to 2 thousand doors on their own ?  now back into what syndicators give their investors.. 

its usually a nice pref interest rate and a pretty big Majority of the up side equity.. like 70/30 to 80 /20 skewed towards the investor..  Ergo the need for scale and massive amount of doors its the only way the syndicator can really build their net worth.. 

So if its capital you need and you have the financing in place then you need a capital partner..  And those are many times starting out family and friends and its not uncommon for them to put up the cash and take half the deal..  

this usually is an issue for those starting out as they just don't see the value in giving up half the deal.. So they get stuck looking for that unicorn investor.. keep in mind with lower price point properties investor may just do it themselves. 

So to start and scale I think you need to be like the syndicators the majority has to go to the investor .. that's why they raise millions.. everyone has a great idea and a great project that is going to be wildly successful.. so there is huge competition for investor dollars.

I took a minute and read your home page..  you have some distinct advantages over many others.. IE Military back Ground and especially being a pilot..  there are ways to monetize those items into investor dollars.

If you catch one of the pod cast from a Oregon fire fighter on this site.. I gave him the recipe to raise substantial monies through his firefighter network.. band of brothers as it were..  I suspect the same recipe could work for you.. he raised well over 1 million in a few short months.. 

I once lived in a community in CA that had about 50 airline pilots in it.. based out of SFO.. and after golf of course they did not want to talk about work they talked about investing.. and there are some sponsor out there that just cater to airline pilots.. so theory.. Hopefully your reading between the lines..  Also check out our charity we created @ Aheroshome.org I suspect you would be proud of our mission.. 

 

@Payton Pearson I have tried the partner thing and it wasn’t a bad experience. I actually learned a ton but eventually same thing happened. They lost interest in real estate and partnership dissolved. So for me, I just assume partnerships aren’t really for me (at this time anyways.).

It takes a special person to what to do the stuff it takes to be in real estate investing. You have to have a big picture mentality with it and understand it’s a lot of work. Most people don’t want to do that, so they burn out eventually.

Originally posted by @Jay Hinrichs :

in this arena you will kiss 100 toads before you find a prince..  

 IMO you are lucky if it only takes 100. Also, have any of you actually kissed a toad? (asking for a friend)

@Payton Pearson

You lost me at doing it like Leroy Jenkins. Jumping in before they are ready and getting team/partners at risk is foolish. Growth just for growth sake is pretty limited. Explain your plan and dreams. Show a plan to get there. How are you different/better than the exponential spots to park $$$? To the money investor, how are you going to grow their money, and protect it if you or the market shift?

Ask yourself am I worth investing in? And if so, why aren’t you trying some creative financing methods to accomplish your goals.

@Payton Pearson in the last 6 years since a I started doing enough deals that I need a partner I’ve had 6 partners.

Both working partnerships sucked. They both ended in lawsuits.

Three others were ok but didn’t last. All the deals except one made money so that made things easier.

IME It’s a lot easier to part ways when there is profit to be split. Splitting losses was the hardest parting of the ways.

one partnership has gone on and that one was and has been really fruitful so worth dealing with the rest.

@Payton Pearson  the you have to start big myth repacked as a new verse. The best way to find a serious partner is to talk with your wife. If you don’t have one then look in the mirror every morning and take responsibility.

Yep, I know that’s not what you wanna hear, because everyone is looking for the missing link for success in someone else. I had a partner my first couple investing years and I ran from investing parters ever since, unless it is a property by property agreement. Money lenders that wants a certain percentage of interest is different. 

Start were you can and rinse and repeat. 

Account Closed I'm taking responsibility. I'm building my business and taking it seriously. If that isn't clear yet, then it will be when you see that I am still purchasing and improving properties.

I have a business model that I am following, but finding other people who are also serious is hard, even here.

@Payton Pearson I don’t say you wasn’t serious, I just wanted to point out my belief from experience concerning partners. (  It is clear you are serious.) 

When it comes to long term buy and hold., my one and only partner now is my wife.

I looked for the “silver bullet” money partners a couple of times myself. Found a couple, but nothing like I was hoping for. I would be paying very high interest with them in first position at 10.5% intrest on the low end. Basically my company would have to buy at a fire sale price in order to cash flow.

I posted before about needing lenders for small seconds without any positive response. 

Hopefully you crack the code best regards :)

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