Invest with investor, or go it alone?

[Jason Ridout]

A very good friend of mine has got me into investing in real estate. I was already somewhat involved, but he introduced me to BP, and the whole world of BRRRs, and finding neighbourhoods that cash flow etc.

He talked me into buying my first strictly rental property, in a city a long way from home. (About 500 miles) I was going to invest locally, but he showed me all the numbers, and where he recommended, was a far better location. I bought a rough 70s house with a suite in the basement. I did some work myself, and had a contractor do some as well. It's in a solid neighbourhood, has gone up due to forced appreciation and the fact that I managed to scoop it for below market value. The house now generates $2500 a month, and I'm into it for about $240,000. It should cash flow about $650 a month after all capital expenses. All this was on my friends advice.

I'd like to invest more into the same city. The numbers work very well. The friend that helped me into my first house there is going to be starting an investment company. He has 6 houses in the same city, and wants to scale up, so is looking for investors. He knows the city better than me, he knows the market better than me, he knows the contractors, property managers, rental market etc better than me. He is more than willing to give me any advice I ask for, but I think he will always be able to squeeze that little bit extra profit out of properties.

So do I buy more property on my own, or just give my cash to him, and let him do his thing? I understand that he will take a cut, but it will be very small. I think it might cost me 5% or so for his costs, but he will probably find a way to get 5% more out of properties than I can. I don't mind being hands on, but at the same time, if I can generate the same growth through him, why spend countless hours learning what he already knows?

For the record, I would never hand money over to an investor that is just starting a company, but like a said, I've know this guy for almost 20 years, and he has never once fed me a lie, and every property he invests in, is extremely well researched, and is always profitable. I trust his investment choices at least as much as my own.