How To Find a Real Estate Partner for Your Investments

When beginning to search for a partner on a real estate deal, you may find that you need something from them in terms of experience, time, or money. However, instead of focusing on what you need from your partner in order to collaborate with an experienced real estate investor, flip the narrative and focus on what opportunity you’re able to offer them. This way, you’re able to make yourself valuable, necessary, and desired from a partnership perspective.

Here are several ways to create value that you can offer a new real estate partner.

How to Win Over a Partner in Real Estate

1) Interest on Money

If your partner is investing money into the deal, you can offer them equity—but also interest on their money. This gives them two revenue streams from this partnership. The interest can be paid out as interest only, a lump sum, or monthly principal and interest payments.

For example, in my first deal, I took on a partner who put up the funds to purchase a duplex with cash. We each received 50% of the cash flow but he also received a monthly principal and interest payment. We set up an amortization schedule for his investment to be repaid over 15 years at 5.5% interest. There was also the option to refinance with a bank and to pay him off at any time.

2) Real Estate Tax Benefits

Depreciation, capital gains tax, pass-through deductions for losses, deferred capital gains, and tax write-offs for real estate investors are benefits that not all potential partners may realize. It is important to point these out—tax savings are a big benefit of real estate investing!

To find out more information, I highly recommend reading The Book on Tax Strategies for Savvy Real Estate Investors.

3) Regular Payouts

By offering monthly payments, you could be helping your partner substantially with their investment. Communicate this early on and see if this is something they would be interested in. This could correlate with paying out an interest payment if they put money into the deal. Making it clear that your partner would be receiving a monthly payment for a rental can be enticing. Who doesn’t love mailbox money! (Well, nowadays, direct deposit money!)

When you put together your partnership, you can structure it to provide opportunities for your partner to earn extra money from the relationship, too. Put together a fee schedule—if a partner completes that task, they are paid out of the partnership. This would be paid out over and above cash flow.

For example, if a partner does the bookkeeping for the property, they are paid $50 a month. Or if a partner completes a maintenance request, they are paid at $20 an hour. This works great if you are afraid of duties becoming uneven or trying to find an equity percentage value that equates to the work each is doing. Instead, just have equal equity and then pay out whatever duties you are completing. Then, outsource the rest.

4) Knowledge

If you are reading this, you have probably already immersed yourself in podcasts, books, blog posts, and forums on real estate investing. Knowledge is an amazing asset to a partner. There are a lot of people who want to invest in real estate but don’t have the time (or want to put in the effort) to actually do the research. Because of this, they have yet to get to a place where they feel comfortable doing it on their own.

Heck, even people who have done tons of research can get stuck in analysis paralysis and need a partner to take them to the next step.

Reading, listening, and absorbing information is great, but you can also get hands on experience, too. Find a part-time job that will pay you to be a leasing agent, fulfill maintenance requests, or assist a real estate agent. There are many side hustle jobs you can do in real estate that will give you access to a network of people, documents, the market, and regulations.

Don’t forget about offering your services as an intern to someone. I like the idea of getting paid while gaining experience, but there are a lot of things you can do right from home to benefit an investor. Partners may come knocking at your door once you’ve acquired a few successful partnerships and can share that knowledge.

5) Time

Time may be something you can offer someone who has a lot on their plate. Many who want to invest in real estate don’t have time to take a deal from start to finish. That is where you could come in! Make it as much of a passive investment for them as you can.

The Bottom Line

These are simply five of the main things you can offer a new real estate partner, but keep in mind that there are many more. Everyone has different skillsets when it comes to real estate investing. Determine the assets you have to offer to reframe the beginning of a new partnership.

What else could be added to this list?

Share in the comment section below.

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.