Hi! Thanks for visiting the blog. Today I want to discuss the power of partnerships when investing in real estate. Had I not met a partner in 2018 and started working alongside him, I would not be where I am today. He became my mentor and friend, and we continue to do projects together today. This article will discuss why it’s beneficial to partner with others and how to find the right partners.
Why Partner on Deals?
Partnerships can take on various shapes and sizes. Whether it’s a full-on partnership of a co-owned business, partnering on one deal, or partnering with specific vendors, partnerships involve building relationships with other individuals to achieve a particular goal.
In real estate, partnerships often form when individuals with complementary skill sets or resources join forces to purchase or manage an asset. Active investors may have a deal but need equity, balance sheet, or operational partners to help get the deal across the finish line.
Passive investors may have capital and a desire to diversify their portfolio into commercial real estate but lack the time, network, or knowledge. Regardless of your situation, partnering with the right individuals’ can act as a catalyst to potentially 10x your growth.
Where to find partners?
Partners are not going to fall into your lap. Active and passive investors must be intentional when searching for partners. If you want to invest in deals, you have to find others doing deals. Places to find these individuals include meet-ups, conferences, and social media. I have personally found residential and commercial multifamily (LP and GP) partners on social media or blogs such as Bigger Pockets. Once connected with potential partners, get to know them as well as possible. Schedule calls with their team and follow them across social media platforms. If it’s an entirely new individual or vendor, I feel it is reasonable and intelligent to ask for a list of references. Remember, before you can like and trust a partner, you have to take the time to get to know them.
Being Direct
During the relationship-building phase of a potential partnership, I feel it is beneficial to be as direct as possible. What do you need, and what can you bring to the table? You’ll likely need deal flow as an LP (limited partner). Don’t be intimidated to ask active investors to include you in their communications so you can receive the next investment opportunity.
As an active investor, I recommend leading with what you can bring to benefit the partnership soon in the relationship. What is your superpower, and how can you scale it to help the group? How will working together be more advantageous than working alone?
Weeding out partners: Market, Assets, Strengths
It’s impossible to partner with everyone; therefore, one must-have partner criteria similar to having investment criteria. I find it easiest to select potential partners based on the markets they invest in. For example, if you desire to invest in Texas, it’ll save you time to seek out individuals investing in Texas. Similarly, if apartment or self-storage assets are your target, you should seek those investing in those asset classes.
Active investors should search for individuals that complement their existing skillsets. For example, suppose your role is director of acquisitions or underwriting, and you need capital partners. In that case, approaching individuals with your current skillset may not be the best strategy. Seeking out experienced equity partners is going to get you results quicker.
Conclusion
In conclusion, partnering with others can drastically accelerate your growth. Both LPs and GPs should focus considerable energy on finding and vetting potential partners. If you live by author Dan Sulivan’s mantra of thinking, who do I need to meet to achieve a goal instead of how do I achieve a goal, you’ll likely get much more traction on your investing journey.
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