How To Find Real Estate Investors And Use Effective Investing Strategies
Melissa Brock4-minute read
September 23, 2021
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 have found yourself 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 find a good match.
What Is A Real Estate Investor?
A real estate investor is an individual who purchases real estate for profit purposes. A real estate agent or REALTOR® can partner with an investor to secure real estate investment 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, including 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 or building a spec home, for example.
When Should Property Investors Consider A Real Estate Investing Partner?
A real estate partnership refers to an investment strategy in which two or more investors purchase a single investment property. Partnerships can refer to active partnerships, in which all parties take responsibility for equal day-to-day management, or passive income partnerships, which raise capital from not-as-involved investors.
Let's take a look at the pros and cons of entering into a real estate investing partnership.
What Are The Advantages?
Let's take a look at the advantages first. A real estate partnership gives you:
- 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 partnership. 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 sprout as well.
- Divides up the workload: Maintaining all day-to-day operations might be difficult for one person, so dividing up the workload can ease the stress on one person.
- 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 on an individual basis.
What Are The Risks?
Consider these risks before you choose 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 may feel as if he or she deserves more capital for the amount of work put in, which could lead to a partner's early exit from the partnership. You can mitigate this risk by making sure the partnership agreement is clear at the very beginning.
- Split earnings: Splitting earnings could completely undermine cash flow earnings between partners, particularly in a bad real estate environment or lackluster investment.
Where To Find Real Estate Investors For A Partnership
You can find real estate investors for a partnership in several forms: through bank financing, a real estate investment club, crowdfunding, your network, online resources and social media. Let's go over a few details for each option.
Consider Bank 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 more strict a bank will be on 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 funds to the investment, which 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, existing business associates, talented members of your town council and more. 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 could help you find the right people for a potential partnership. However, it's important to make sure you use a reputable site or look into the right memberships – in other words, don't find yourself 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 include Facebook and LinkedIn, especially if you build up your profile around your real estate business acumen.
The Bottom Line On Finding Real Estate Investors
Finding real estate investors and choosing whether it makes sense to partner with other investors to help raise capital can become a tough decision.
You may have been investing in real estate for just months or for years before you want to learn how to get an investor for real estate. No matter how long you've been investing, it’s important to find a fellow real estate investor who balances your own strengths and weaknesses. You also want to partner with someone you can trust, whether that individual comes from your personal network, from a real estate investment club that you belong to, from an online resource or social media.
Learn more about real estate investing with Rocket Mortgage®.
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