Partnerships

What do Fred and Barney, Bert and Ernie, Abbott and Costello, and Starsky and Hutch all have in common?

Successful partnerships.

I am a big believer in partnerships.  I believe everyone is equipped with different skills, abilities, and positions in life and by finding the correct corresponding puzzle piece, you can achieve together much more than you can achieve apart.

In a recent post I suggested using a partner’s income and down payment to secure property. This is a technique I have used several times, with great success. I received an email recently asking how to overcome a potential partner’s objections to doing this.  The underlying question is

“why would a partner put down all the down payment plus their income and credit to get a 50/50 partnership when they could just do it by themselves?

This is an excellent question.  I am often asked this by others when I mention this strategy. The funny thing is – I have never been asked this by my partners. Why not? There are four reasons why this is not an issue and how to overcome those objections when they do arise:

  1. 50% is better than 0%.  The truth is, most people with good income, stable jobs, and perfect borrowing ability don’t invest. It’s not because of lack of resources, but rather a lack of knowledge and motivation.  The simple truth is that although they could buy a real estate investment on their own – they won’t.
  2. My 50% is worth it. It is important that a partner knows that although I am not putting any money into the deal it doesn’t mean I’m not putting anything into it. I am putting years of experience, knowledge, and deal-making ability into the deal.  In many cases, I am going to be running the day-to-day operations of the rehab (if needed) and managing the property for years to come.
  3. I’m selling a valuable product – When I seek out partnerships, I do not come “begging” for help. I am not looking for a favor. I am offering a solid return backed by years of experience and the probability of profit many times greater than the stock market. When I made this shift in my thinking, my investment world was transformed. I have the deal – I found it, put it together, ran the numbers, and got the property under contract. I have an amazing investment opportunity, and I am giving others the chance to be a part of it.
  4. The property is an amazing deal – I believe that if you have a great deal, the financing is the least of your concerns. If you are having difficulty finding financing or partnerships – you need to ask yourself: “Is this deal really that great of a deal?”  I only buy properties that cashflow extremely well and have great amounts of equity (its worth more than I owe) . I only buy incredible deals. If you do the same, you’ll find eager funding.

Will some partners still have problems with this? Yes.  They will say “Well, I could just do it myself.” However, when you find a killer deal and make it work, those same people will regret not working with you. They will see that they have done nothing while you made a killing. You can guess who will be first in line to be your 50% partner on your next deal.

 

 

 

 

P.S. looking for hard money loans in California? Be sure to check out my friends over at northcoastfinancialinc.com. They have very competitive rates, can fund within a week and specialize in fix and flip loans and other hard money loans.