As a real estate investor, a great way to minimize risk is by working with partners. You might need one or two or three or more. Maybe you split the costs evenly, or perhaps someone else finances the project while you do the bulk of the work. Whatever the case may be, there are a ton of different scenarios that can make what looks like a dangerously risky situation totally possible.
Finding investment partners isn’t as hard as you might think, either. It could be a spouse, friend, family member or neighbour. Maybe it’s a colleague or someone you meet through an investment network or social group. For real estate investors, the opportunities to meet like-minded people are plentiful. I suggest taking courses and joining associations; network through Facebook or LinkedIn; attend conferences and take part in online forums. If you introduce yourself to other investors and tell them your plan you might just find people who are happy to support you, coach you, and even potentially partner up with you.
These days I work with all kinds of different investing partners (as you may have seen in my show, Buyers Bootcamp), but the first was my friend and roommate at University. At the time there was no way either he or I would have been able to qualify for a mortgage and purchase a property on our own, so our solution was to work together. We pooled our student loan money and shared all of the responsibilities – and risks – 50/50. Neither one of us had any real experience, and other than our student loans we had no money, but what we did have were similar goals and work ethics. We were both determined to do whatever we had to do to make it happen, and that’s what made it a successful partnership.
Working with Partners = More Money
I’ve heard some people say they’re against taking on partners because they don’t want to have to share the profits. I understand in theory, but this is really short-sighted. I’ve seen through my businesses time and time again that the people who invest in real estate with partners end up with more properties at a faster rate than those who don’t. Over time they end up with more money than those who go at it alone. Even without all the other benefits, that reason alone should be enough.
More Reasons to Invest with Partners
Make no mistake, there are other benefits to working with partners besides just a potential increase in income. First, they help with the initial costs. Coming up with a downpayment can be the most challenging part of investing in a property. With only $7500 in student loan money, I couldn’t afford to purchase a house on my own, but when I added my partner’s $7500 the impossible suddenly became possible.
Second, partners can help take on other burdens and responsibilities. When we purchased our first few rental properties we had to do repairs, maintain the homes, and find and manage tenants. Having a partner to share these responsibilities helped ease the burden.
Also, don’t forget the emotional support that comes from investing partners. When you have someone to share successes and losses with, it makes the successes sweeter and the losses less painful. And of course, surrounding yourself with dedicated, energetic people who share your goals will make the entire venture more enjoyable.