How to find the ideal real estate investment partner

Maybe you’re an experienced real estate investor looking for new opportunities. Maybe you’re new to the business and curious about the experience and skill sets of others. Maybe you’ve simply heard about real estate investment partners and want to learn more. If any of these describe you, you’re in the right place.

What is a real estate investor?

A real estate investor buys real estate for profit. There are many ways to get into real estate investing, including:

• Buying a property to rent out.
• Investing in real estate stock or a real estate investment trust
• Participating in a real estate crowdfunding opportunity
• Renting out part of your home, though be sure to follow local guidelines
• Building a spec home

Common types of real estate investors

Real estate investors have varying goals, strategies, and risk tolerance. Before you decide to look for a partner, make sure you know how each type works.

• House flippers: House flipping is a popular way to invest in real estate. Flippers buy properties that are usually distressed or run down to repair and renovate. They then resell the property at a profit.
• Rental property owners: This type of investor buys residential or commercial properties and rents them out for profit. They might manage the property themselves or hire a property manager to handle day-to-day tasks.
• MBS investors: A mortgage-backed security is a bond that combines multiple mortgages into an investment package. As long as people pay their mortgages, MBSs can be a safe investment.
• Private equity investors: These are investors who form private companies that buy real estate. By pooling their money and strategizing with other investors, they can maximize profit.
• REIT investors: A real estate investment trust is a company or financial group with a diverse real estate portfolio that might include both commercial and residential properties. Because their investment is spread over many properties, there is relatively low risk.

When should property investors consider a partner?

Like any investment, the real estate market changes over time. Successful investors prepare for both highs and lows. Having a diverse portfolio can minimize your financial risk. So can partnering with someone who has a different skill set than your own.

When you enter a real estate partnership, you will share the costs and ownership of an investment property. Some partnerships are active, which means that everyone shares responsibility for managing the property. Others are passive, which allow you to build profit with less involvement.

You might want to consider a partner to:

• Combine skillsets for house-flipping
• Buy a rental property you can’t afford on your own
• Buy a rental property you don’t want to manage yourself
• Get into real estate investing with an experienced individual

Any kind of relationship has its advantages and disadvantages, so be sure to consider carefully before diving into a partnership.

What are the advantages?

There are many benefits to real estate investing, but working with a partner comes with additional advantages:

• You can combine talents. Having partners in real estate investing means you can combine your abilities, backgrounds, connections, and marketing skills.
• You can divide the workload. With a partner, you no longer have to manage the entire investment on your own.
• You can combine resources. You’ll no longer have just your own funds in a partnership. With the added cash flow, you’ll be able to take on larger projects you might not be able to access on your own.

What are the risks?

The risks of a real estate partnership include:

• Work styles or opinions may clash. Sometimes, your management style or approach to business might conflict with your partner’s. These things happen, and it’s important to get to know your potential partner before investing money.
• Your partner may contribute less than you like. Things don’t always go as planned, and you might find yourself doing more of the heavy lifting than your partner. Be sure to establish clear boundaries and responsibilities before you invest.
• You’ll split the profits. While two or more people can invest in a more expensive property, you’ll have to share your profits with your partner. This may leave you earning less money than if you’d invested on your own.

Where to find real estate investment partners

You may find partners for your real estate investment through:

• Real estate investment clubs
• Crowdfunding platforms
• Your personal or professional network
• Online resources

Find a real estate investment club

Joining a real estate investment club or association would allow you to network with other investors in the market. Here, you might not just find one partner, but several partners willing to pool resources. Sites like ezLandlordForms or the National Real Estate Investors Association can help you find local clubs.

Crowdfunding platforms

Crowdfunding pools resources from multiple investors using digital platforms. Because anyone can start a crowdfunding campaign, it’s important to establish your credibility and focus on funding a single project with a clear goal.

Target your network

You might already know the perfect partner without realizing it, especially if you’re already investing in real estate. Ask your family, friends, business associates, as well as anyone you may have met while looking into real estate. Many real estate agents keep a list of investors on file, so if you’ve worked with one recently, speaking with them is another option.

Find online resources

You can find like-minded people interested in investments on community websites such as Meetup and BiggerPockets. Exploring social media sites such as LinkedIn and Facebook also may be an option, especially if your profile focuses on the real estate business.

However, it’s important to remember that it’s easy online for anyone to pretend to be someone they’re not. Make sure you’re interacting with people whose experience can be verified, and watch out for mortgage scams.

The bottom line: Find real estate investors through community groups and referrals

When it comes to finding a real estate investment partner, there are plenty of options. However, think carefully about your situation and whether it makes sense to enter a partnership. Real estate is a big investment with a lot to gain, but also a lot to lose if you choose the wrong partner or investment. You’ll want to find a partner you can trust, who complements your strengths and weaknesses without causing problems.

If you aren’t sure you’re ready for a partnership yet, but you want to purchase an investment property, you can begin the process just as you would for a primary residence. You can start the preapproval process with Rocket Mortgage® today.