How to go about finding a partner for your flip?

Question

Hi BP,I was wondering -- how did you all find your partner (if you have one) for flipping? I have a decent amount of capital, but not enough for me to purchase properties where I'd like to (no more than 20 mins outside of Boston, MA). I mentioned to one of my mentors that instead of FHA(ing) 30 minutes outside of Boston, that I'd rather just flip until I have enough capital to purchase where I want. But, now the next challenge is finding other people to bring in on deals/vice-versa. How did you go about it? Anyone from MA?

Sid Leibowitz · Answer

I am not from MA. I am in New York. It all depends on how strong your resume is. Mine is strong. I am a contractor with previous development experience. I circulate my resume with local accountants. I am a sweat equity partner and I source the property, do comps, line item estimates, project management, and market the house. I seek only financial partners who have liquid funds and are all passive investors. They are seeking a better and safer short term investments than Wall Street or banks offering lower interest. The property is the collateral. They are on the deed. The investors pay for the wholesale labor and material. I am compensated as an equal partner when the property closes. The term could be to 6 months from cradle to grave. Some investors are seeking a single deal and some are seeking something long term. After one deal they can cash in and take their chips and go however most go for another deal on another house. They all make greater than Wall Street without the risk and more than the bank interest being offered. Hope this helps.

Patrick Wheeler · Answer

@Craig Moore I would just focus on first finding a deal that makes sense as a flip. I'm a buy and hold investor, but if I get something under contract for a flip, I have a couple guys I can reach out to for partnering up. Just take a small percentage of the profit on the first one if need be. Exactly what I plan on doing.

Robert Whitelaw · Answer

Not from MA, but no matter where you are, it's about your data. You put together your info (which you may have gotten from using the investment calculators here on BP) and assemble a packet that explains your plan clearly and what they payoff is for your "partner". You can then use this with folks within your sphere, or even here on BP to find someone.Hope that helps,R

Grigory Pekarsky · Answer

It's not always easy to find someone who shares your same passion and vision. Qualities that make a good partner in investment areas are motivation level, commitment capacity, communication skills etc. But first of all, before finding any potential partners - it's important that you figure out what kind of investment you want to make. For instance, if you purchase a home with an intent on reselling it within weeks or months - this transfer of ownership would be considered speculative. On the other hand, if your intention is to hold this house as long term rental it becomes categorized under intended use. One of the great places for finding partners is real estate related forums and message boards. You need to do some research first and dedicate time into figuring out who these people are before getting in touch. Through forum participation – you can learn more about the market trends as well as finding potential candidates for flipping houses with you. You might also want to look at commercial real estate brokers or wholesalers specialized in the area you intend to invest.

Kendra Sutherland · Answer

You might also check with a Realtor or Broker that actually manages rental properties and can give you some indepth information on a specific market and rental rates in that market if you are plannng on holding the investment.

Dave Schmidt · Answer

@Craig Moore I would try to find a local hard money lender to help you make the most of your funds. Or you could do what was mentioned above and find local private individuals to partner with. There are pros and cons to each method.One thing I would focus on as well is how do you plan on finding deals? Lenders either private or hard money lenders are going to want to see great deals. If you don't have a great deal and there is a lot of risk nobody will want to touch it, so I suggest that you start researching how to find the best deals in your market. Another approach maybe to invest passively for a couple years as you are looking for deals or learning. Investing passively means you could invest with a local hard money lender in some of their notes. You may find lenders willing to give 8-10% on their notes.There is always a ton of money looking for a place to go and grow but the reality is they want low risk deals with large amounts of equity, which at this moment tends to be the hardest thing for most to find. Find excellent deals, be knowledgeable about the business, and limit investor/lender risk and you should be able to find a money partner.

Brian Nally · Answer

what @Kendra Sutherland said

Saberian Younger · Answer

Also, check mrmoneymustache.com for ways to save capital @Craig Moore. I try to stay well rounded in my path towards financial independence, not just RE. The number one best thing that you can do to help with saving is to automate so that as soon as your paycheck comes money goes directly to your investment accounts. Also, as stated by @Sid Leibowitz concentrate on getting your credit up. There is a way to do this and research will help. I protect my credit score very carefully. Good luck friend.

Sid Leibowitz · Answer

In addition to Darren's comments. Try to study the criteria of FICO scores and try to strive to build on your current scores. This helps in future financing and credibility

Darren Sager · Answer

I think @Sid Leibowitz summed it up pretty well. Experience is everything. If you have little to none @Craig Moore perhaps you should find a mentor who you can team up with and in addition to your capital that you can contribute you can also learn the process. It won't happen overnight. I've been at this for almost 20 years now and I still do things to learn almost every day as well as constantly trying to find new ways of being able to get a project done start to finish in the most efficient manner (and on budget). If you don't want to go that route and want to hold all the cards start networking with hard money lenders to see if they can fund what you're trying to accomplish. After you have it going well the rates you pay will go down and the money you'll attract will go up. Don't expect anything to happen overnight. It never does because it's not a lottery. Be patient, and keep at it every day.