Since I started Practicing real estate investing, about a years ago I was trying to buy a piece of real estate, it was a Triplex that needed a bit of work done to it, but the numbers were solid and I knew it would make a great deal, here comes the problem, I HAD NO MONEY. How do I do this? And I was able to find a solution, which was getting a partnership.
You are about to find out how to practice real estate investing with no money of your own but a partnership to invest.
Finding a good partner to help fund a deal is one of the best ways to finance a piece of real estate and one that many Real Estate Investors without a lot of cash start with Partnerships were great because of something we call the Deal Delta.
Investing and putting deals together in real estate, three things are required;
All three of them don’t need to be provided by you instead a partner can make up the difference for whatever it is you are lacking. For example, you might bring the hustle and the knowledge but a partner can bring the money. Now, you have all the parts needed to make a deal happen.
So back to my story this Triplex comes on the market in my area and I immediately jumped at the opportunity but I didn’t have any money and I didn’t even have a W-2 job like no one’s going to be alone at all. No ability to fund the deal. So where most people would simply give up I asked myself the all-important question. How do I get this deal done? The answered I stumbled upon was bringing in a partner. You know, I spoke with some friends of mine from the church and other all places whom I had known for many years and I knew that they shared interest on investing in real estate, this couple both work stable government jobs, they had good income excellent credit and no time.
They wanted to invest into real estate, but they lack the hustle or the time needed to complete the Deal Delta, so I propose the solution they come up with a 35 Grand down that we needed for a down payment and I would take care of the rest. I would bring the knowledge and the hustle they would bring the cash and we own the deal now for like six years and every year we save up our cash flow and to the end of the year and we split everything 50/50 on average every year now.
We each take home about five grand a year and just profit that’s like 400 bucks each every month from that deal. In addition. We now have almost $100,000 of equity in the property that someday we’ll split and likely turn that in the future deals. That’s the Power of a partnership when funding deals.
The cool thing is, I did that deal with no money down. Now when I tell the story, there are two completely opposite responses. I typically get two responses.
get number one person say, why in the world would a partner agree to lose 50 percent when they’re bringing the money? why wouldn’t they just do the deal themselves and get a hundred percent?
I get it, but why would you be so generous to give somebody 50% just for bringing some of the money. I mean you found the deal, you negotiated it, you manage the rehab, you manage the property on a continual basis to make sure it produces that profit.
They don’t have to do anything. I just wrote a check. Why would you give him 50% You know, it’s funny how those two responses are completely opposite from each other and each one’s response is based on their predefined opinion of what value is being brought after all I couldn’t do the deal without the cash, but they couldn’t deal without my hustle and knowledge.
To me, that’s a perfect partnership. So we split 50/50 but doesn’t mean has to be 50/50 your partnership can be whatever you define it to be based on how you and your partner view the value that each party is bringing now.
Finally. Keep in mind, a partnership is like a marriage when it’s really good. It’s really good. But when it’s bad, it’s really bad. So take the time needed to find a potential partner, don’t just jump into bed with the first person who wants to work with you find someone who fits within your style your goals and your ambitions.