Imagine you are trying to buy a piece of real estate. Imagine it was a 20 unit multifamily, and you think the numbers are solid and you believe it would be a good investment.
But you have a problem—you have no money.
So you give up, thinking it was impossible. Instead you go about your normal routine of working 9-5 and living paycheck to paycheck.
Or, instead, what you could do is asked the right questions and find a solution: consider a partnership.
Here I’ll explain how to use a partnership to invest in real estate using no money of your own or working with someone who has the experience that you don’t have.
Finding a good partner to help fund a deal or find a property and manage it is one of the best ways to break into real estate investing. It’s also one that many investors without a lot of cash or experience or even faith in themselves begin with. Partnerships work great because, as Rocky said about his relationship with Adrian.. they “fill gaps”.
To put together a real estate deal, three things are required:
Understanding / Experience
But here’s the thing—all three don’t have to be supplied by you. Partners can fill in where you have “gaps”.
For example, you might bring the work and or the experience, but a partner can supply or find the capital. At that point, you likely have everything you need to get started !
Imagine this multifamily came on the market in your area, and you wanted to take a stab at it. But, you don’t have enough or even any capital.
This is where many people get stuck and may even give up. So you ask yourself the obvious question: “Where do I go from here to be able to purchase this property?”
The answer you come to is to bring in a partner or partners.
You speak with some friends who you know for years and think share an interest in making money and maybe even have an interest in real estate. Look for someone working a stable job, has a good income, and has solid credit. Maybe what they don’t have is, is what you have, TIME !
So if your contact wanted to get into real estate but lacked the time (or desire to work at it) needed to manage the property. So, you offer a solution. Your “new partner” comes up with the $$$ needed for the down payment, you do the work.
You figure out how to make the offer and close the deal and they would put up the capital and credit. You could own a property for years, and each year you can split up the cash flow 50/50 or whatever agreement you both think is equitable.
For example, you each earn around $2,500 per year (that’s over $200 per month each) in profit from a deal. In addition, you building equity as the tenant pay off the mortgage and as the property appreciates over time – which someday you’d split and possibly reinvest into a larger investment.
That is the power of a partnership. And you can do a deal for no money down. Zero. When this is considered, there are generally two completely opposite responses:
- Why in the world would this partner agree to losing 50 percent when they are bringing all the money?! Why wouldn’t they just do it themselves and get 100%?
- Why would someone be so generous to give someone 50 percent just for bringing the money? You found the deal, negotiated it, managed the daily operations to make sure it produces a profit. They didn’t have to do anything but write a check!
Interesting how those two views are completely opposite from each other, and one’s response is based on their preconceived opinion of what “value” is. After all, you could not do the deal without their cash. They could not do the deal without you work.
That’s a perfect partnership. So you split it 50/50. But it doesn’t have to be 50/50. Your partnership can be whatever you’ve defined it to be, based on how you and your partner(s) view the value each party is bringing.
Finally, keep in mind that a partnership is like a marriage. It must be built on trust.
So take the time needed to find and vet your potential partner. Don’t jump into it with the first person who wants to work with you. Find someone who fits with your style, goals, and ambitions.
Real estate investing can be a powerful way to build wealth and achieve financial freedom. But knowing where to start can be a challange.
Dual City Investments and FITS Academy can help you to learn how to get started.