If you're gonna buy real estate, everybody should know how to invest in real estate
with a partner because nothing will fast track your real estate career
better than building partnerships with people that you can partner on deals.
But how do you do that in a way where it's actually successful? Let's find out.
Nothing has built my business faster than building partnerships in real estate and in this video,
I'm going to give you the 5 things you need to know so that you can build successful partnerships
in real estate deals. And if you stick around to the end, I'll let you know the thing that kills
partnerships faster than anything else. Let's go. The first thing you want to do
is define the type of partnership. What kind of partnership are we building and what role
is each person playing? Is this person simply a limited money partner, meaning they're investing in
the deal but they have zero role in how the deal actually is operated? They have zero commitment
and the operating agreement requires nothing of them. A limited money partner is a huge partner
because they can put money into your deals and get them done faster however, they don't really offer
much value in the execution of the deal. So, if you're just looking for money, limited partners are
amazing. If you're looking for a sponsor that knows what they're doing and an operator that can bring
a property to success, a limited money partner is not the partner you want to build. But they
are invaluable to continue to do deals faster and then you can find that know-how someplace else if
you don't already have it. The 2nd one is an active investor. This is the idea of somebody who
puts money into the deal, but they do have a role. They provide consulting to the deal, maybe they
connect with the manager, maybe they deal with the banks, maybe they connect with the investors.
Maybe they're sending out emails and making sure everybody knows what's going on, they're connecting
with the bank, maybe they run the financials. An active investor not only puts money in the deal,
but they also have an active role in the operation of the deal. And that's really powerful to have on
your team because it spreads out the amount of work that has to be done by one specific person.
The 3rd type of partnership is a deal finder. You want somebody on your team who can just be hunting
deals down. That person is so valuable in bringing a deal to the table, but let me tell you, some of
you right now, you may not have the partners, you may not have the money but you know of a
deal. Can I tell you something? You are extremely valued in the partnership process of real estate
because a lot of us are looking for good deals. If you have a good deal, you reach out to us, you
will automatically find a seat at the table. So, don't discount what you have if you just know of
a good deal. That is half the battle, if not more, so don't discount that. If you have a good deal,
start partnering with people that are looking for it that may already have the money raised.
The next type of partner is an asset manager. This is the person that literally manages the property
manager or make sure the asset is under good control. So, our property manager covers all of
the day-to-day operations, but I still communicate with that property manager to make sure they know
what they're doing, make sure they're doing a good job, make sure they have any questions or need
any decisions made. I'm there to make sure those questions can be answered. That may be you on your
first couple deals, you may actually be the asset manager where you can manage the property manager
who's actually managing the asset. An asset manager doesn't actually mean that you're doing the work,
it means you're just managing the entire process of the work getting done or connecting with the
people that are doing the work. But no matter what type of partnership you do, make sure there's
complement value from people in the partnership. Make sure if you already have a deal, don't partner
with somebody else who has a deal, partner with somebody who has the money or somebody who has
the bank power or somebody who has the operational know-how. Look for somebody that has what you do
not have. Because I have good relationships with lenders, I have people reach out to me often that
want me on the team just to help them get a loan. If that's you, reach out to somebody who
can help you get the loan, but don't reach out to somebody who has the exact same value as you have.
Make sure you're connecting with people that complement the value you have because they have
something you do not, and you have something they don't. The 2nd thing you want to decide when
you're building a partner in real estate is are we going to create a joint venture or a syndication?
A joint venture is simply an equal partner playing field, where a syndication has much different
nuances in the fact that it's limited partners and general partners. Let me explain. In a joint venture,
everybody has a role. It's actually illegal to have limited partners in a joint venture agreement.
Every single person in a joint venture needs to have a role; they need to have a seat at the table
in which they play a specific role to that deal. Now, some of my investors come in and they are
consultants to the deal and the role they play is advisors. They actually give consulting advice to
the deal. Whether we listen to or carry out that advice doesn't really matter, the idea's they're on
the team as a consultant and that's the role they play. In a JV, everybody has a role. In a syndication,
it breaks it up into 2 different groups: limited partners and general partners. General partners are
the people usually that find the deal, raise the money and manage the asset, limited partners are
people that just invest in the deal, they have no say over what happens but they have no role
in the deal. A syndication creates a fence between those running the deal and those investing in the
deal, and that's the difference. Now, let me tell you a quick thing about syndication. It's really
expensive to get done, so syndications usually are for bigger deals. Your legal fees alone will be in
the 10 to 2$0,000 range to build a syndication document. So, it's a much more expensive route,
but it's usually for much bigger deals. Smaller deals often don't have enough profit to make a
syndication make sense. Also, make sure you watch our video on what is a real estate syndication and
it'll explain how you actually put one together and why it's profitable. Before I go on to the next
tip, make sure you subscribe to the video and also hit that bell notification so you get notified
every time we drop a video. On our channel, we cover loads of topics so you know how to find deals and
how to find money. Let's get back to the content. The next thing you want to do is create an LLC.
So, you're going to want to put the LLC together that's actually going to own the property you're
investing in. So, the way you do this is partner with a real estate attorney that can create an LLC
and an operating agreement document. The operating agreement outlines everybody's roles,
it outlines who's putting money in and it outlines who's doing what so you know exactly
what to expect in the future. And it also outlines the managing members, who's making the final decisions,
does everybody get equal voting rights or is one person really driving the decisions of the deal?
But the attorney will also create the letters of a corporation, create the LLC, file the LCC and
they'll give you your EIN number, your employer identification number. So, the attorney will take
care of all of the filing and all of the work, but after you've picked your partnership, decided what
you're going to do, found your deal, you want to put it into an LLC so the LLC owns that property
and mitigates the risk against you or any of your partners. The 4th thing you're going to do is
open a bank account with that LLC. So, you're going to take that LLC, give that paperwork to the bank
and open up a bank account so that you can operate that property from a single account.
Most banks that give you a loan for a property, they're going to have a requirement that you
run the operating account from that bank. So, you're going to open up a bank account inside
the bank that gave you that money, and that's where money's going to flow in and money's going
to flow out. Your bank will require your articles of incorporation and your operating agreement in
order to open that account. So, make sure you have all those done first from your attorney before you
go to a bank to open up an account. But after you open up that account, then the banker is going to
give you wire transfer information and then it's time for our last tip on an LLC where we have all
of our investors wire the money to this specific bank account so we can invest in the property.
After that money's been transferred, that money will be used for the down payment, the closing
costs and every cost of acquisition required in that property. What will also happen is when you
buy a property, any deposits that were collected at closing from the previous owner are going to
be put into that account. If there's any cash that comes with the property, it will be put into that
account and in the future, that account will be set up as rents or any income from any type
of property you own will go into that account and then you can disperse money to the owners
straight from that bank account. The number one thing that kills partnerships over time
is unplanned for personality differences. When I create my partnerships, I want to have people
that have different skill sets, but that also have the similar mission and the similar way
of doing business in me. Personality differences can cannibalize a partnership faster than anything
else, I've seen it happen. Somebody's really high strung, another person's really laid back, the high
strung person feels like the laid back person's not doing anything, the laid-back person feels
like the high strung person is stressing the whole deal out and these personality differences begin
to cannibalize the partnership. The point is I'm not telling you to find people exactly like you,
but there's a range I look for. I want skill sets to be different but there's a range that this is
kind of the way we do business and I look for people that fit our culture. It's like a company
hiring somebody, they're looking for certain kinds of people that fit the culture they're
seeking to create. They're seeking to create a high energy culture, they might look for high
energy, extroverted individuals. If somebody's trying to create a much more softer welcoming
culture, maybe they look for more introverted, nurturing type people. The idea is every single
business has a culture and your partnership needs a culture as well and I would tell you who are
listening to this video, you set that culture. You dictate that culture and then invite people into
that partnership that match that culture. Don't be so antsy to do a deal that you bring people into
a partnership that don't match the mission and don't match the personalities in the real group
culture that you're seeking to create. I have a free gift for you for tuning in today I want
to give you our free multi-family master class. If you click the link below, you're going to be
taken to a free 60-minute training that outlines how to get a piece of multi-family real estate
in 71 days or less. Sounds crazy? This is the exact process I put my students through
that are helping them get properties over and over again. I'll see you in the training.