Power in Partners: Leverage

Partnering with another investor can be a huge advantage, and even a critical step to massive success. Partnering is a form of leverage, and leverage is everything in real estate. You can’t grow to any significant level without some sort of leverage. Whether you are completely new or experienced, partnerships can provide many benefits.

Here are a few benefits of partnering….

Specialties

People choose partners because their specialties compliment each others. Work your strengths and partner with people who are great at your weak points. You may not be comfortable with certain tasks so you might consider finding someone who is experienced in that field. This allows you to focus on what you do best, which creates efficiency and increases business production. Imagine how big your business could be if you had someone specialize in one area in your business; acquisitions, accounting, marketing, etc. You can’t wear all the hats all the time and grow a large business.

Example 1: Large Real Estate funds are typically set up with multiple partners. One partner may be the face of the company who is great at marketing the business and raising funds, while the others specialize in asset management or take on more of an administrative roll. There are simply too many moving parts to juggle at the level required.

Example 2: If you want to grow a flipping business and you have no experience managing contractors then you might consider partnering with a general contractor. They can manage the projects while you take on everything else. You could also bring in a third partner who may have experience in acquisitions. Between the three partners, you should be able to scale up the business quickly.

Combine networks

Ever heard the saying, “network=net worth”, well its 100% true. Real estate, at any level, is truly a people business.

Example: When I was in the flipping business, I needed a lender for a rehab project. My original lender was maxed out on loans. I didn’t know what to do so I called a flipper that I had met at a local REIA. He put me in contact with one of his lenders and we ended up closing the deal two weeks later. If I had never built up my network I would never have done that deal. Never stop growing your network.

Imagine finding someone who has the same vision as you and has been in the industry for many years. By partnering, you now have the power of their network, as well as yours.

Borrowed Confidence and Credibility

Partnerships don’t have to be long-term. They can be more of a joint venture, where you only do a few deals together .If you are stuck at a certain level and see someone performing higher than you, partnering with that person will dramatically increase your confidence and credibility in growing a large business. Just associating and being around successful people will give you a significant advantage over someone trying to build a business on their own.

Example: Buying small multi-family properties in the 2-4 unit range requires a different network and systems than the 50-75 unit range. If you are in the 2-4 and want to move up to the 50+ units, you might see that as a daunting task. By partnering with someone that is currently buying a 50+ unit apartment complexes, you will have a huge boost in credibility, confidence, and knowledge. After a deal or two, you will have everything you need to purchase them on your own (or stick with the partner to scale up quicker).

Starting Off

Starting off in Real Estate and choosing one strategy to focus on can take some time. Once you have a strategy and are starting to do a few deals you soon realize that you are making mistakes. Every deal becomes easier and more streamlined as you get more experience. Sometimes it takes years and years to become the expert in that niche. To fast-forward this process, you can choose to partner with someone experienced in your field. This will speed up the learning curve and allow you to perform at a higher level in a quicker time-line.

Finding Partners

Finding someone who has the same vision as you and is willing to partner up on a few deals is not easy. You have to constantly reach out to people and network to find the right person. This will take more than one conversation to build the trust needed in a partnership.

If you are looking for an experienced investor to show you the ropes, make sure you are providing enough value to make it worth their time. This might include finding, managing day-to-day, and raising funds. If you don’t have experience in any of those fields than you NEED to skill up and give the potential partner a reason to work with you.

Misc

Using bank financing is also a form of partnership leveraging…after all, they are putting up 70-80% of the funds and helping underwrite the deal!