PARTNERSHIPS - BEST STRATEGIES FOR MULTI-FAMILY INVESTING! :-)

[Landon Ross Cobb]

Hi all!

Would love to welcome everyone to share their input on a couple scenarios for potential partnerships that I am considering.

First of all, my name is Landon, I'm 24, I live in Shreveport, LA! Currently I am a realtor and I am getting into buying small multi-family units, 2-10 units and looking to partner with investors who have money but not necessarily time/knowledge/hustle.

I spend majority of my time/efforts on finding/analyzing GOOD-GREAT off market deals and I am seeking to partner 50/50 with investors who want to build a long-term buy/hold portfolio.

The route I am leaning more toward is simply going into the partnerships 50/50, I bring some capital/the deal/management/time/effort/analysis, they bring the capital for down payment/rehab/repairs.

And we split equity/income/resale profits 50/50...

How realistic is this approach?

What challenges may I encounter?

Has anyone done this that could share feedback?

What am I not considering here?

Another route my mentor has run by me is this... I partner with hard money investors who have the cash to buy the entire asset, they fund the rehab/repairs & purchase of property, we BRRR it essentially and after 90 days, I refinance out and put the asset under my LLC (me having 100% ownership) and pay them their dollars back + "X"% interest.

How realistic is this approach?

What challenges may I encounter?

Has anyone done this that could share feedback?

What am I not considering here?

I love both methods but am leaning more towards the first one simply because of the ability to scale faster and having aligned interest with the investor partners.

If anyone has a different strategy that they can see working better, please let me know!

Feel free to DM to connect!

[Account Closed]

@Landon Ross Cobb have you checked out the RE360 REI group on Facebook or attended one of their meetings? @Michael Faulk is pretty involved and attending the meetings will allow you to network with individuals who have capital and are looking to partner up. 

Personally, on small MF investments of 5 units and up, a debt play may be the wise route where you simply borrow the capital to procure/rehab the units and then pay a reasonable interest rate to the lender. 

For hard money you are looking at 10-12% easy. Private lending you can probably start at 8 or 9% and, after a deal or two, be able to command 5 to 6%. Also, after you have experience, you may be able to negotiate a lump sum interest payment at the end of the project. However, there are some things to consider here. First, the deal must have enough meat on the bones to support the debt interest. Second, the rent delta between current and market must be significant to command a higher potential future NOI. Third, you will need to focus on 5 units or up as they are appraised based on NOI, not comps. and Fourth, you will need to either 'flip' these or cash-out refinance them with a bank as your exit strategy, the latter of which will require significant added value/equity.

I am a SFH investor in Bossier City. I am starting to move into Syndication so if you would like to connect with me here or on Facebook, just reach out. Best of luck!