Partnering, Quickest Way to Real Estate Investing Success
People ask me all the time how is it possible to buy so much real estate in a short period of time? The answer is simple. Partners! I will elaborate more about "short period of time" later in the article.
Unfortunately, I, like many of you, do not have a tree growing money in my back yard. I especially did not have one when I got started in real estate. Although I had a passion for real estate, I lacked funds needed to get started. So, with help from some friends, we combined our resources and away we went. Ten years later I have partnered with many people and have bought and sold well over a million dollars in real estate. So when people ask me what is the best way to get ahead in real estate investing, I say find a partner.
A partner can be can be a friend, family member, somebody from your church or some other organization that you belong to. A partner can also come in the form of handymen (and ladies). My partner and I bought a home that was in dire need of repair. However, we just could not pass up the deal that was being offered to purchase the property. We both knew there were things that needed to be repaired in the house that we just could not handle. So we partnered with some contractors to get the work done. When the house sold they would be paid plus some interest for their wait. Now, not all contractors would be willing to do that, but throwing in a creative deal allowing them to make more then what they would have, was just another way to bring on a partner to allow us to complete this project and make some money.
There are all sorts of partnering techniques you can use. That is just one of the many that I used. The most common one is finding a few partners, everyone throws in an equal share of money and you buy some property. This method is probably the easiest, since individually no one has a large amount into a single property. Revenue earned from are usually then rolled into the next property, and so on until the partnership owns a lot of property. Make sure you draw a partnership agreement, covering the entire basis. You will want to consult with a tax advisor and / or attorney to make sure everything is handled legally and no one gets screwed in the end. Also set up an exit strategy for the partnership. How long do you plan on owning the property? What if one partner wants to get out? Thos type of things. Consult your tax adviser or attorney to draw up a document for your partnership, and then make sure everyone understands it and signs it.
I wanted to address "short period of time" in this article because I feel it is an important topic that needs to be discussed. This phrase has such a generalized meaning. For some, short might mean, a couple of months, or maybe mean a couple of years. One thing I do stress to people I talk to is, if you are going to invest in real estate, move at a comfortable pace. You do not want to move too fast only to find you are over your head, or even worse, you put your partners in over their heads. You decide what "short period of time means" and make sure you understand what your partner's definition is as well.
By: Mike Podlesny