How can I convince my uncle to be my partner?

Question

He is my grandmother’s brother and is 77 years old. He became a multimillionaire because of stocks in the mid ‘90s.

He tried to help me start an eBay business back in 2005, but there were too many obstacles. I never see this guy except for on holidays.

He offered to teach me the stock market, but I wasn’t really interested.He’d only need to put down less than $20k with reserves. Maybe he could do the hard money loan and make even more money

I have a $50k HELOC taken out on my house. I don’t want to put $35k down on a hard money loan and risk my house if I’m not able to make the payments (especially if I blow out my reserves and have to pay $350/month in HELOC payments). I have $17k that I could turn into a SDIRA, but I’ve heard this is difficult to use. Less than $20k down is more reasonable. For this, I need a partner.

My girlfriend (who owns $50k in stocks and whose mother invests in real estate) backed out. My mother who has $150k equity in her fixed up house backed out.

The only person left that I could at least semi trust is my incredibly wealthy uncle. I plan to ask him on Good Friday if he wants to make some money.

This would be for a BRRRR so it's less risky but more difficult to get out of, but yet with excellent earning potential (especially if he provides the hard money loan).

He doesn’t do much. He retired a while ago, but still invests in stocks as a part time job. He seems to want to help at least with advice on being successful especially when he sees people struggle. He plans to leave all of his worth (which also includes a 3/4 million dollar house/land) to the church when he passes away.

Please help

Mike Dymski · Answer

Run the numbers through your deal analyzer, compile a small presentation that outlines the business plan, investment returns, and your track record and walk the potential investor(s) through it.  It's better to add value to people than to convince.

Scott Krone · Answer

@Mike Schorah - Why do you think he wants to invest in real estate?  It sounds like he has a great heart wanting people to succeed, and trying to help you earlier in your career.  It also appears his interest is in stocks.  Just because he has money doesn't mean he wants to invest in real estate.   Most 77 year olds are not looking for growth, they are looking for preservation and liquidity to live off.

I took a great course by Productive Strategies on FOCIS.  It is a program to better understand sales and marketing.  For instance, how many times have you gotten a call where the first thing you hear is, "I have got the perfect (insurance, CRM, accounting software, or other tool) for you."  The first thought that goes through my head is, "How can they possibly know what is perfect for my company when they don't know what my company does?"  I would be willing to bet the same is true for your uncle.

You may have a great property, solution and strategy, but if it doesn't align with his goals it won't be a fit.  Perhaps spend Good Friday learning more about your uncle and understanding his investment strategies to determine if he has interest in real estate.  It may yield you better results than asking, "Do you want to make some money."

Jon Kelly · Answer

@Mike Schorah you don't even believe in yourself and your deal(s) what makes you think your uncle will?

You mentioned, "I don't want to put $35k down on a hard money loan and risk my house if I'm not able to make the payments (especially if I blow out my reserves and have to pay $350/month in HELOC payments)."

Your girlfriend backed out. Your mom backed out. You need to give them (or any other person / lender) a reason to trust and believe in you. Experience is a very valuable thing. I would suggest trying to invest your owns funds on your first deal. After you prove to yourself you're a successful real estate investor then start reaching out to scale up.

Jonathan R McLaughlin · Answer

@Mike Schorah your girlfriend with some knowledge of real estate and your mom backed out? Hmmmm….

Scott Mac · Answer

Hi Mike,

Seems like this guy likes his "Church" better than he likes you (maybe you should see him more than just on Holidays).

You should try to convince him to do a living trust giving YOU 100% of everything. (If he knew you better and like you --he might)

And re investment money--get a second job on weekends and nights for a few months and save up the $20,000 you think you will need.

Then keep up the second job until you get to $60,000 or so saved in a savings account for investment.

That will give you a $40,000 cash cushion.

Just my 2 cents.

Barbara Lynn · Answer

This statement is very interesting of why you would semi-trust. I agree with one of the other posts about having a relationship with your uncle that is substantial. "The only person left that I could at least semi trust is my incredibly wealthy uncle."

I don't have any of what you have ie savings or an uncle but still jump in and do it.

Why don't you find a great deal of a fixer house first and then go to your uncle with numbers and exit strategy? Why 20K?

Also how is your credit? You have liquidity but you do not want to risk your money but want someone else to take the risk. Unless I am misunderstanding.

Eddie L. · Answer

Is there a specific church per se? Perhaps start going to church to convince some members to partner up with you and group convince him to join your real estate journey.

Alex Sylvia · Answer

SDIRAs are sometimes cumbersome, oftentimes due to working around your custodian's office hours. However, there are solutions that can be discussed, such as a Checkbook Control LLC. That topic is an entire can of worms, but can ultimately create some "ease-of-use" with an SDIRA.

Not something to jump into without full understanding of the rules surrounding SDIRAs, but I'm happy to help where I can if you want to jump on a call sometime this week.

Full disclosure: I work for an SDIRA custodian. I won't pitch you on our services but I will give you a complete understanding of what it all entails.

Getting your IRA funds involved sounds like it might be a key piece in getting your down payment to a reasonable level.edit: Also, I'm not entirely clear on the investment that you'd need a partner (or IRA funds) to make. First and foremost, we'll need to determine if your IRA can even be involved. If a prohibited transaction is there, or seems likely, the IRA may not be able to get involved.

How can I convince my uncle to be my partner?

Most Popular Reply