How To Find Real Estate Investors And Use Effective Investing Strategies
Melissa Brock4-minute read
January 11, 2023
It’s nice to lean on someone else in life – and possibly in real estate as well.
If you’re already a real estate investor, you may be at the point in your business that you want to partner with another real estate investor to locate opportunities together.
Let’s go over how to find real estate investors, the advantages and disadvantages of getting a real estate investing partner, where to find them and how to identify a good match.
What Is A Real Estate Investor?
A real estate investor is someone who purchases real estate for profit purposes. A real estate agent or REALTOR® often partners with an investor to secure real estate investments or real estate deals.
The most obvious way to become a real estate investor is to buy rental property. But you can become a real estate investor in other ways, which include investing in real estate stock or a real estate investment trust (REIT), participating in a real estate crowdfunding opportunity, renting out part of your home and building a spec home.
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When Should Property Investors Consider Getting A Real Estate Investing Partner?
A real estate partnership refers to an investment strategy where two or more investors purchase a single investment property. Partnerships can be active partnerships – where all parties take responsibility for equal day-to-day property management – or passive income partnerships, which raise capital from not-as-involved investors.
Up next are the pros and cons of entering into a real estate investing partnership.
What Are The Advantages?
Let’s take a look at the benefits of investing in real estate with fellow investors. A real estate partnership:
- Offers a range of talent: The old adage “two heads are better than one” certainly applies to real estate investing partnerships. Partners can bring various characteristics to add to the flavor of the business relationship. Maybe one partner brings considerable business savvy and an in-depth real estate background, and another brings creative marketing experience and ideas to the table. The more people in the mix, the more flavorful the talent – and a variety of ideas can be the end result.
- Divides up the workload: Maintaining all day-to-day operations might be difficult for one person, so dividing up the workload can ease their stress.
- Can combine resources: Having a partner can add considerable cash flow to a real estate partnership opportunity. It allows real estate investors to take on projects they wouldn’t normally be able to access individually.
What Are The Risks?
Consider these risks before choosing to dive into a real estate partnership:
- Work styles or opinions may differ. Inviting another person (or more than one person) into the fold can create personality or management-style conflict.
- Partners may not contribute evenly to the workload. When partners don’t contribute to their share of the workload, it can cause complications. One partner may feel like they deserve more capital for the amount of work put in, which could lead to that partner’s early exit from the relationship. You can mitigate this risk by making sure the partnership agreement is clear from the beginning.
- Earnings will be divided. Splitting earnings could completely undermine cash flow earnings between partners, particularly in a bad real estate environment or lackluster investment.
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Where To Find Real Estate Investors For A Partnership
You can find real estate investors for a partnership in several ways: through bank financing, a real estate investment club, crowdfunding, your current personal or professional network, and online resources such as social media. Let’s learn a little about each option.
Consider Mortgage Financing
A bank can support your investment goals and loan the money for a particular investment property. Real estate banks should offer a wide variety of financing options, including opportunities for multiple properties.
However, the riskier the transaction, the stricter banks and mortgage lenders will be about funding real estate property. A real estate investing partner can help mitigate that risk.
You might need to apply for mortgage loans to purchase properties or find other real estate investors to help you generate your startup funds.
Find A Real Estate Investment Club
Real estate investment clubs help you find an investor by networking with other investors in the real estate market who are interested in real estate investing. Pooling resources with others can encourage larger investments that may not be possible with just one investor.
Crowdfunding refers to pooling real estate investing capital from multiple investors using a digital platform to find investors. Crowdfunding connects investors who will donate money to the investment, and this money goes into a fund for a particular project.
Target Your Network
You may not have to look far outside your community or other groups to which you belong to find the right partner. Consider family and friends, people you know from church groups, business associates and talented members of your town council. Targeting and narrowing your network can help you find the investors you want to work with.
You may also want to touch base with your real estate agent because they usually keep a list of investors on file.
Find Online Resources
Online investment groups and communities like Meetup and BiggerPockets could help you find the right people for a partnership. However, it’s important to make sure you use a reputable website or look into the right memberships. In other words, don’t get trapped in a scam or other shady deal.
Use Social Media
Social media groups target real estate investors by facilitating partnerships. Some popular social media networks to use are Facebook and LinkedIn, especially if you build up your profile around your real estate business acumen. The audio app Clubhouse has also grown in popularity as an easy way to connect with fellow real estate investors.
The Bottom Line: Find The Best Real Estate Investor To Meet Your Goals
Finding real estate investors and deciding whether it makes sense to partner with them to raise capital can be a tough decision.
No matter how long you’ve been investing in real estate – whether you’re a beginner or you’ve been flipping houses for years – it’s important to find a fellow real estate investor who balances your strengths and weaknesses.
You also should partner with someone you can trust, whether that individual comes from your personal network, a real estate investment club that you belong to, social media and other online resources, or your own real estate agent.
If you’re serious about real estate investing – but aren’t yet sold on partnering with an investor – you still need to start somewhere. Purchasing an investment property generally begins in the same place as any home-buying journey – with a preapproval. Partner with Rocket Mortgage® and start your approval process today.
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