Partnerships with Rental Property Investing

Partnerships with Rental Property Investing

Lesson Agenda: learn about how partnerships can be a viable option when it comes to acquiring rental properties what is a partnership examples of partnership structures why they might be a good option where to find potential partners

What is a partnership in real estate investing?

When you bring in another individual(s) to help you find, acquire or manage rental property.

This partner will often make up for a weakness or need that you have when it comes to investing.

What do I mean by weakness or need? Let s say that you have spent the last year researching,reading books, watching your housing market and feel ready to finally buy a property

BUT..

In this past year, you ve only been able to save $5,000 to put toward a potential property.

In most cases, that $5,000 isn t going to get you very far. Unless you re planning to house hack your property, your down payment alone will be higher than this.

So what do you need? You ve gained the knowledge and you ve started to save however.

So what do you need? you need more capital in order to actually acquire the property.

This is where a partner could come into play. Specifically a partner that can help financially.

Or perhaps you have no knowledge about investing in rental property, but you have money that you want to invest and want someone who has the knowledge to help you.

Here is where a partnership can be beneficial as well

There are a number of scenarios I could present you with about different ideas of partnerships but in most cases there is a need or weakness from one side that can be filled with a partner

And the truth is It s a great option for newbie investors.

And the truth is Not only can it diversify the financial risk that is taken on with investing in rentals

And the truth is But it can also give one a sense of security to know that you re not in it alone

Let s see some examples Knowledge Money

Let s see some examples Knowledge/Money Money Down payment Profits Deed Loan Management 50/50 split 50/50 split Both parties are on the deed Both parties are on the loan Both parties split management

Let s see some examples Work Money

Let s see some examples Work Money Down payment Profits Deed Loan 100% (from one party) 50/50 split Both parties are on the deed Only one party is on the loan Management One party handles mgmt (one who didn t pay down payment)

Let s see some examples Credit Money

Let s see some examples Credit Money Down payment Profits 100% (from one party) 50/50 Split 50/50 split Deed Loan Management Both parties (single party) are on the deed Only one party is on the loan agreement on handling management

Where to find partners? Start with your personal network

Let people you know (family, friends, colleagues, etc) know what you are doing or want to do.

You d be surprised to learn that there are others that you already have relationships with that may be interested in it too

Investing Groups/Local Meet-Ups Start attending local investing meetings or national REIA meetings

When you attend these you can start networking and seeing if there s anyone who is looking for a partner

Online Investor Networking Groups Not only can you find your future spouse online.but you can find investing partners too

Online Investor Networking Groups There are so many investing groups online (RentalRookie, Biggerpockets, etc) where people come together to network and learn

Online Investor Networking Groups And partnerships can be built from those online interactions

Partnerships Pros and Cons

Pros Can allow you to purchase a property with less money out of your pocket

Pros Can allow you to get into investing in rentals even with bad credit

Pros Can allow you to get into investing in rentals even with little to no money

Pros Helps diversify the financial risk

Pros Gives you someone to learn from or learn with during the investing journey

Pros Could allow you to scale faster when you partner up

Cons You have to learn how to work with people

Cons You ll have to ensure that you re negotiating good partnership structures for both parties

Cons There may be a little more stress knowing someone else s money is involved

Conclusion It can be a great way to enter into the real estate investing game

Conclusion But also a great way to start scaling once you already own a few properties.

Side Note We didn t bring partners into our own investing portfolio until we had owned 6 units.

Side Note Then we felt confident enough in what we were doing to invite others to join us

Conclusion So, if you re looking for a way to get started but know you have a weakness or a need to help you get over that hurdle seriously consider using the partnership strategy.