Approaching local investor about partnering

[Jake Thompson]

Hey guys and gals,

I recently purchased a duplex and about a month later another investor purchased the 4 plex next door to me. He is a full time investor with several 2-4 unit properties. We have been talking for a little while now and he has been helping me out with advice about my property. So I guess you'd say he's becoming a mentor to me.

We're both interested in getting into apartment deals and I am in talks with a realtor about a small complex from a older couple looking to retire. I know I won't have the funds on my own but I'd like to approach my neighbor/mentor about it and see if he'd be interested in partnering, if the deal is good. Even if it's not, I am still hoping to partner with him on a small apartment. My question is what would be the best way to approach him about this possibility? Should I show him a good deal first and see if he likes the deal, then ask if he'd be interested in partnering? I always hear about meeting local investors but I'm not quite sure how to take that next step, or if I even should. Maybe it would be better to keep our relationship strictly as a mentor/mentee(is that a word?). Anyways I appreciate all advice/support/criticism.

[Joel Owens]

Go to lunch and ask as a general question has he ever partnered on a deal and was it a positive experience?

You are trying to get his general thoughts on his being open to it or more closed off based on bad experiences in the past.

If he seems neutral to positive you could bring up you are thinking of bringing in a partner on a deal and start talking about the property and details. Let him take the lead if he has interest. See what he thinks would be fair on such a deal. Let him throw out the terms and percentages. He might give better terms than what you were thinking of offering.

If you do decide to form some kind of partnership have an attorney draft the legal documents. Do not go by the handshake or verbal agreement type thing. When things are good people tend to be fine with that but if things go wrong or difficult decisions need to be made on what happens with an investment you need to go back to your signed paperwork on options.