Partnerships- What burning questions do you have?

Question

Regarding the acquisition of an apartment building... let's say 100 units... what would you like to know about if you've never done a deal before (especially a big one) and you want to partner-up with someone to work with (JV, a mentor or coach, like-minded person, etc.)?

Christal Warren · Answer

@Chris Tracy  Thanks so much for all the great information.  I just finished listening to the @Joe Fairless podcast you recommended.  I am in the middle of finding partners, equity investors, for a multifamily property so reading these posts was very beneficial.  Thanks again.

Chris Tracy · Answer

@Frank Adams- for issue #1 here's the solution: Basically when you're talking to people in the industry (especially brokers) it's all about what you say.  Here's a script you can use next time you get hit with the POF objection:  "Ok... Here's how I typically do things... I can't show you POF at this stage because to buy buildings like this one, I ultimately will form a syndication and I don't know which investor(s) will participate in the deal.  Know what I mean Mr./Mrs. Broker?"  And you're not lying, that's how it goes and the broker should understand that.  You can also explain that you keep your investors that you work with very private. Just keep learning the lingo of the business, get people to trust you more and more, and you will hear that POF roadblock less and less.

For issue #2: I would start with your local REIA, the Chamber Of Commerce, the Rotary Club, charity dinners, seminars held by IRA custodians and anywhere that people hang out that do well and probably have money that they really don't know what to do with it.  Many times it's physicians, attorneys, chiropractors, etc.  In the meantime, until you have your own database of private lenders and you can take stuff down yourself- bring deals to the various people in this forum!

Hope that helps!

Chris Tracy · Answer

@Alex Hively- Coming up with investor partners is not easy by any stretch of the imagination.

There's a lot of conflicting opinions on the topic of raising private money, but here's how I do it:

Step 1- You need a good deal.  That will attract investors to you for starters.  It ultimately comes down to your level of credibility.  If you are just starting out you will probably need to ride someone else's coattails.

Connect with some of the big players in this forum and offer to bring value.  Toggling back and forth between looking for a deal and looking for investors is what I have found to be most effective.  It takes a while and it's a grind, but you just have to build up your database, keep looking for deals, keep talking to people about what you do, keep learning (especially the syndication process).  Rinse and repeat.  As you grow and become more successful, people will trust you more.  Brokers will send you better deals and stop sending you junk, which in turn will make for a better deal for your investors.  Then people will start talking about you to their family and friends, etc.

People struggle because they give up too soon and get distracted by shiny objects.

There's plenty of money out there looking for a home, you just have to find it and treat it right!

Chris Tracy · Answer

@Michael Dang- Thank you for the kind words!  The biggest needs I would say for any investor group would be deals, the ability to underwrite those deals, wherewithal to go on a mortgage as a sponsor, be an equity partner and/or bring one to the table.  You can also invest your time if you don't have any of those things.

Check out this episode by @Joe Fairless- http://joefairless.com/?s=giants.

(I wish I had a dollar for every time I recommended this podcast episode... haha)

Michael Dang · Answer

@Chris Tracy - Wealth of knowledge you've communicated.  To support Chris statement, the money is out there, but the deals are hard to find.  At the moment, what I'm trying to overcome is how I can bring value to an experienced partner or co-sponsor.

Being accredited is nice, building relationships with local brokers & commercial lenders is good, being a part of a investment program is awesome, learning from BP is spectacular, but what else can an investor with no syndication experience bring?

What other actions to build a reputation can make a person standout?

Chris Tracy · Answer

@Ryan Evans- How much experience do you have with being an asset manager?  Do you need a sponsor?  Have you ever bought a large property before?  You could do anywhere from 50/50 to 75/25 depending on how much help you need on the management side.  Personally, I prefer to give the investors the lion's share of the deal because that is what will fuel your whole business, keep them coming back to you and tell their friends and family how awesome you are!

Frank Adams · Answer

@Ivan Barratt I tried talking the talk (using the lingo) last night after Chris posted that with the seller of 150 units. Yes, it was only by e-mail but that was all I could do. It was very helpful and I feel I'm integrating that into my speech already...

Frank Adams · Answer

@Ryan Evans I'd like to know that as well. Determining a good/fair split for the money partner(s)?

Ivan Barratt · Answer

@Frank Adams I own 1250 units and I haven't once had to show proof of funds. Often I have to explain where my equity comes from but have never then been asked to show a bank statement. @Chris Tracy is spot on! You just need to learn the lingo and walk tall brother!

Partnerships- What burning questions do you have?

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