How to go about finding partners - Posted by Chris in TX

Posted by Heather_Tx on July 26, 2003 at 12:12:03:


We are now on our second deal with this partner, and we only work on a case by case basis. And yes I was forunate! He is also an officer in my investment club here so I knew of his reputation and hence everything was verbal. We even kept all the records of everything, and he trusted us to do that (I saved all the receipts for everything) At the closing to resell the property, I had everything put in a speadsheet that showed who paid what, reciepts for each and everything, and we had the profit split at the closing 50/50. Worked real well.
Now saying that, had this been someone that I didn’t know of their reputation, and had not been a member of our REI, I would have had everything in writing to cover myself, but I know reputation is very important in this business and a seasoned REI with this position wouldn’t want to do a deal unfairly and mess up that rep that they have made for themselves.

You need to be able to have a trusting relationship with someone you would like to partner with. Build a groundwork before you just verbally split a deal. Getting together for lunches, talking at the meetings, and don’t hesitate to ask other investors if they have worked with the person you might want to partner with and how their experiences were.

Hope this Helps,
Heather Zaal

How to go about finding partners - Posted by Chris in TX

Posted by Chris in TX on July 24, 2003 at 10:33:20:

Hi everybody,
I know we aren’t suppose to advertise looking for a partner here, so what is the best way to go about doing so?
Thanks for your advice!

Re: How to go about finding partners - Posted by Jim Kennedy - Houston, TX

Posted by Jim Kennedy - Houston, TX on July 31, 2003 at 12:22:05:


You’ve received some very good advice in response to your post.

I agree with Marcos that long-term, exclusive partnerships are difficult to get right. Frequently, one partner starts to think that the other party isn’t carrying his/her weight in the partnership. Eventually resentment builds and the partnership deteriorates. However, as Marcos mentioned, joint venturing (or partnering on a deal by deal basis) can be a mutually profitable and satisfying experience.

Also, as Linda Simms suggested, it’s always best to put everything in writing. I happen to be the “partner” to whom Heather refers, and normally we’d have executed a joint venture agreement. I typically use a simple two-page document that spells out who’s bringing what to the table, who’s going to contribute what during the course of the project, and how the profits are going to be split.

As Heather mentioned, we did our first deal verbally, which is extremely unusual for me. Heather has already explained why she and her husband, Eric, felt comfortable proceeding without a written agreement. Fortunately, I’ve done enough joint ventures with new investors that I’ve developed a reputation for treating my “partners” fairly. My philosophy is to operate with integrity so as to protect that reputation. As for why I felt comfortable working with Heather and Eric without a written joint venture agreement, it boiled down to a “gut feeling”. I know, not a very good reason for deviating from procedure, but I felt really good about them. We structured the deal in such a manner that if they hadn’t been honorable people, only I could have lost. This wasn’t a conscious decision, but simply the way we happened to put the deal together. Had they wanted to take advantage of me, they could have. Had I wanted to take advantage of them, I wouldn’t have been able to do so. Worse case scenario, had their first deal blown up in my face, I’d have simple lost one half of one small deal. Not really a big issue as far as I’m concerned. All I’d have lost would have been money and money is easy to replace. They, on the other hand, would have lost the friendship and support of someone who believes in them and is rooting for their success. As Heather mentioned, we’re into our second deal together and it’s progressing nicely. There will come a time in the near future when they won’t need to partner with me - or anyone else for that matter. They’ll be ready to “go it alone”.

Heather has done a very good job of explaining why “partnering” on your first few deals is good for the new investor. Now I’d like to explain why it’s good for the other half of the team - the experienced investor. The first and most obvious reason is the money. As long as the profits are split fairly and equitably, the experienced investor is going to make a reasonable profit for his/her contribution to the project. Usually, I’ll ask the new investor what he/she thinks is reasonable as far as a split is concerned. You’d be surprised at how often the “newbie” is willing to give up more of the profit than is necessary, just to gain the experience and learn how the process works. I know I’ve surprised more than one newbie by taking less of the profit than they offered. Why, you might ask, would I be willing to take less than is offered? It goes back to my philosophy of operating with integrity. If I do what is right and fair, I know I’ll get more business - if not from that individual, then from referrals.

The second reason that “partnering” is good for the experienced investor is increased business. Since the newbie is bringing the deal to the table, the experienced investor gets to participate in a deal that he/she would not otherwise have known about. I think of these deals as having “fallen into my lap”, so to speak, since the newbie has already done the marketing and/or prospecting in order to find the deal.

The third reason that “partnering” is good for the experienced investor is somewhat more nebulous. It’s the personal satisfaction one gains from helping another. Don’t get me wrong - this isn’t an altruistic enterprise. I’m definitely in it for the profit potential. This third reason is merely the “icing on the cake”. It really feels good when your “partners” thank you for helping them get their first deal done. It’s especially gratifying when they come back and say, “Let’s do it again!!” And it’s even more gratifying when they spread the word and refer other new investors to partner with you.

And finally, it’s good for the experienced investor’s self-esteem to be called upon for help. I think that the role of teacher/mentor is good for one’s ego. Just don’t let it go to your head!

BTW, where in Texas are you located? Hopefully, the Houston area!! (smile)

Best of Success!!

Jim Kennedy,
Houston, TX

“Nothing makes one feel so strong as a call for help”.
~George MacDonald~

Advertising here - Posted by John

Posted by John on July 24, 2003 at 16:36:56:

Wow! This is the only place you could find to advertise? Your part of TX must be pretty lacking in advertising media if this is the best you could find.

Using this site to advertise is like a car salesman passing out his cards to all the other car salesmen on his lot! Probably not a lot of prospects there. Or here, if you get my drift.

Re: How to go about finding partners - Posted by Marcos

Posted by Marcos on July 24, 2003 at 11:10:00:

My question to you would be what are you looking for in a partner? What would they bring to the table? What do you bring to the table? How will the work end up being divided? What is your exit plan?

But, my main question would be why do you feel you NEED a partner? Partnerships as a rule are very difficult to get right. How can a true “partnership” work in the long term? You can’t split things equally. It doesn’t work that way. You will always feel like your input and role is greater than your partner, and he/she will feel the same way. You may have money, they may have credit. How are those divided equally? You may be better at putting deals together, your partner may be better at selling those deals? How do you divide those?

I’m very open to joint ventures and partnering. But as far as taking on a full-time partner, I am very against it. The failure ratio is way too great.

Just my opinion though,


Re: How to go about finding partners - Posted by Heather_Tx

Posted by Heather_Tx on July 24, 2003 at 11:24:01:

I will agree that making a “Formal partnership” might not be in your best interest. I will also add though that having a partner on a per deal basis can be a great way to get started in REI. I’m still new and have partnered both of my rehabs with a very experienced investor, which helped me do both of those deals that I might not have been able to do on my own.
I brought both deals to the table, done the majority of the legwork on recognizing the repairs needed and the prices for those repairs, lining up the contractors, checking in on them everyother day, running the ads in the paper, I did some of the weeding out of the tire kicker buyers… and so on. Partner provided the funds, the knowledge and the security that I wasn’t in this alone in case I screwed up LOL

Your Local investment club is a great place to start looking for someone to partner with if you are new to the business. But I will ad too that you have to be VERY determined to take the deal and run with it and get things done. Once someone notices this determination and drive then they may just offer to help you out with the funding and so forth. I’ve heard from several new people starting out that they just can’t find $$ partners… but just asking doesn’t cut it sometimes. I sure wouldn’t lend my money and sources to someone that didn’t show the drive to get the deal done, or an eagerness to REALLY Learn. Too many fly by night newbies.

So I would suggest going to the local REI meetings, talk with experienced investors, and maybe ask them how you can help THEM, and that if you brought a really good deal to the table and could do all the performance and leg work, would they mind partnering for half the profits. Just my 2cents :slight_smile:


Re: How to go about finding partners - Posted by Linda Simms

Posted by Linda Simms on July 25, 2003 at 15:00:22:

Heather. What kind of a split of the net proceeds did you make with your partner, since you did all the work and the other person evidently only put up the funds?

Re: How to go about finding partners - Posted by Heather_Tx

Posted by Heather_Tx on July 25, 2003 at 23:35:26:

50/50 profit split. And he did more than only funding, he helped me walk through the contracts, and told me over lunches about how to get started in REI, the first deal was a Preforeclosure,sub2,Rehab… that I wouldn’t have been able to do alone.
But putting up the funding is well worth half the profits alone… without that I would have made 0. Splitting 50/50 is very exceptable to me and hopefully the next one or soon after that I will have the available funds to do it on my own. I am approved for a HML also, but making even interest payments on a 100K or so loan would really hurt when starting out unless I got a great deal and had enough left over after repairs from the HML to cover 6 months of holding also.

If I was just looking for a private money lender, then I would give a percentage not a split, but starting out, having someone experienced there to guide you through everything and avoid mistakes you might otherwise make … that’s priceless. I learn, get private money (With no points!!) and make 50% Nice trade off :slight_smile:


Re: How to go about finding partners - Posted by Linda Simms

Posted by Linda Simms on July 26, 2003 at 11:22:02:

You were extremely fortunate to find, what sound like to be the perfect partner for a beginner. He or she must have been very impressed with you fortitude and deternination to do this deal with you. Was it a one time deal or a continuing relationship? I would venture to say very few partnerships turn out as well as yours. Did you have all this down in writing or were you working from a verbal agreement? If it it was verbal you are are even more fortunate. To avoid any missed communication, I would certainly recommend having it all down in writing and signed by both parties.