Partner has 20k wants to invest

[Stephen Underhill]

Hey all, I have a perspective partner looking to invest $20k in the next few months, and is wanting to get into real estate. He wants to get into buy and hold, but is interested in partnering up. Right now I don't have the funds to match, but do know the market better and have a solid understanding of the basics. I want to make this work of course but he seems interested in shorter term, which makes me think of a flip, rather than a long term hold partner. Obviously this is his money and I need to work with what he's comfortable with, and he's being very flexible, I just don't know how feasible a 50/50 split will be on a smaller property. If it was a larger balance I could just finance the whole property, but since it's not, I will still need alternative funding

[Steven Stokes]

Be very very very careful dealing with other people's money. It's different when you have money in the deal and they have money in the deal. In your situation, your partner is putting up all the money and you're putting up nothing so if the entire deal goes south, you walk away and gain valuable experience and your partner will have paid for your education.

Here's what I would do if I were in your situation:

1. Don't spend the entire chunk on one deal. Use the money for small things like earnest money or marketing ($1,000 - 3,000) per deal, but don't throw all his money into one deal and hope it wins.
2. Have a strong EXIT and a back up exit. If you're doing a wholesale deal, have a cash buyer already lined up, if you're doing a lease option, have a renter in place, if you're doing a flip know who you're going to flip it too. I know this makes it harder but you're not dealing with your money.
3. Do small deals to build up your funds and your track record. This will do more to help you and help your partner feel more comfortable with you.
4. You will absolutely, guaranteed, no doubt about it make mistakes - do not hide them from your partner. Accept the setback and move forward but stay open and honest with your partners and investor at all times.

This is the main points I'm sure I could think of more but most of all be careful and good luck!