Family/friend/newly-networked Equity Partner?

Question

What’s the most common/most suggested way rehabbers/flippers find equity partners? I understand the background work of of the LAPS system and providing a well-researched document of why the deal is so great for both parties, but I guess my questions is where does one find these people? Should we be asking friends and family or networking with local real estate folks? Both/and? Thanks!

Casie Nicholson · Answer

@Garrett Ellison Thanks Garrett! True about Wholesaling....I haven’t seen too many great offers thrown out there in our area. At least from what I’ve seen, they haven’t been the best locations.

Garrett Ellison · Answer

This is a great question, and one that I also racked my brain for answers when I was first getting started not long ago!

I know this can seem scary, at first, but try not to worry so much about the equity partner right out of the gate.  What's more important is the deal.  If you start searching for deals instead of the equity partner, you go from being someone who has less/no leverage (just starting out), to someone with a PRIZE.

It's much easier to find an equity partner when you've got a great deal on the hook first.  Then, the money will find you as you advertise that deal.  Remember, there are always financing contingencies in place when you offer on homes that will protect you, in the event that you fall through on finding a partner.  Also, you always want to offer (almost embarrassingly) low on properties, so that it's a good deal any way you slice it.

Worst case (besides a simple deal fall-through), you could always wholesale the property - we all know it's not too hard to beat out the other wholesalers' inventory, haha.

Zach Hoereth · Answer

@Casie Nicholson Family and friends can be a great option when it comes to sourcing an equity partner/s. That said, from personal experience in flipping and raising private capital your partners are investing in you at the end of the day. They are trusting your judgement, character, and expertise to see that the project runs it's course and each party realizes success! Good luck!!

Cheers,

Zach

Michinori Kaneko · Answer

what about the people you have been rehabbing for? or maybe people who bid in the same properties as you (and maybe you won or lost the deals)?

Alex Hamilton · Answer

It appears that the low hanging fruit that you and Garret seek Casie may be obtained at low ball prices but, the lower the price of acquisition, the higher the expense getting the property to market.  I suggest partnering with someone who has as much experience as possible in the market before trying to go it alone.  Remember, going it alone is fast but, we who go with others go further.

Casie Nicholson · Answer

@Zach Hoereth absolutely, thanks Zach!

Casie Nicholson · Answer

@Michinori Kaneko Ah, yeah that second option sounds wise. Hadn’t thought of that! Thanks!

Family/friend/newly-networked Equity Partner?

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