You and me, and me and you.
Running a successful business, regardless of what kind, is much more easily accomplished by leveraging your skills, talents, and abilities to get the most out of them. It is also accomplished by leveraging the talents of others. Real estate is no different. If you think about it, most of us are doing this already. We leverage technology to help us search for more properties than we ever could without the internet. We leverage calculator apps to help us crunch numbers much faster than we ever could on our own. We leverage the knowledge of others through articles like this to learn new ideas and find inspiration much faster than we ever could trying to learn everything on our own. In fact, most new things we learn in real estate are really just new ways to leverage someone or something else more effectively and efficiently.
Now, I’d like to talk about an underutilized form of leverage in real estate. That would be partners. Partners can supercharge your results and get the ball rolling for you much faster, if you find the right one. The beautiful thing about people is we are all different. No two are the same. We have different skill sets, abilities, strengths, weaknesses, knowledge bases, and motivations. Some of us thrive under situations where others wither, and vice versa. The best sports teams in the world are those that learn how to emphasize the strengths of of it’s players while minimizing their weaknesses. This is accomplished by having a diverse set of players with different skill sets that can be used in different situations, depending on what is called for to accomplish the objective in front of them. The best coaches are able to design a gameplay that allows their players strengths to shine while hiding their weaknesses. Why do I bring this up? Because we can learn from this and apply it to our own personal goals in our lives.
The first thing you need to do is define your goal. If you’re reading a post like this, your goal is likely to make money investing real estate. The next step is to ask yourself what skills are needed to accomplish this goal. Like any small business owner, you’ll find that there are a wide range of skill sets needed to succeed at this. Being good talking to people and making them feel comfortable is important in navigating uncomfortable conversations about buying homes under market value. The ability to understand math, crunch numbers, and use spreadsheets is important in deciding which properties to buy and how much to pay. The ability to read, comprehend, and understand legal terms and concepts is important when reading or creating contracts. The ability to organize and keep things in order on a timeline is important in both buying new properties and managing evictions. The ability to see the big picture is important when making decisions on what kind of properties to buy. The ability to save or raise the capital to purchase the properties in the first place.
Once you’ve determined what skills you’ll need, it makes sense to have an honest conversation with yourself about which of these skill sets you possess, and which you do not. You may be great at talking to people and establishing a rapport, but horrible with the math aspect. You may be very detailed and organized, but easily lose sight of the big picture. In my opinion, recognizing your weaknesses is just as important as knowing your strengths. Now what if you could find someone else to handle all the things you are not good at, freeing your mind and time to focus on the things you are? This is how you supercharge results.
Now the fact of the matter is, most of us are already doing this even if we don’t realize it. Hiring a property manager to handle the day to day issues that pop up saves us time to focus on more productive activities. Hiring a construction crew to do our rehab projects saves us the time of having to learn the trade, buy the tools, and put the time in to learning a completely new skill set. Hiring a home inspector accomplishes the same purpose. Hiring a mortgage broker or loan agent saves us the time of having to do our own research for loans as well as finding our own lenders. Now all this stuff may seem obvious, but if you’re using these vendors as “partners” to help you more effectively manage your business, why not think about finding a way to do the same thing with a traditional “partner”.
In addition to helping you achieve your financial goals, partners can also teach us things we didn’t know. Sometimes, just being around someone else and seeing how they handle situations is all it takes for us to learn things we never knew. By the power of osmosis, we all gain information from those we spend time with. Being around those who know things we don’t makes us smarter as a side effect.
The best partnerships involve people with similar values and business practices, but different skill sets. Having one person who can focus on which properties to buy and another to focus on making those properties profitable is a common blue prints used by many people to increase their success in buy and hold deals. Finding one person to finance the deal and another to acquire the property and manage the rehab is another strategy commonly used in the flipping world. If you do the math, you may find it would take you a year to save up enough for the down payment on your first flip. What if you were to find a partner who could finance the deal, and accomplish 4 flips in that same year? Assuming you split the profits 50-50, you would have the the equivalent of the profit of 2 flips, all before you ever would have even saved up the money for your first one! And your the partner with the money, you can earn 50% of the profits of a flip you may have had no idea how to do on your own, while still going to work and earning money like you usually do. For most people with money to invest but no knowledge of or contacts in real estate, providing the financing through real estate partnerships can be a no brainer way to earn a return much higher than any traditional investment form while not adding any time burdens to your life.
A few questions to ask yourself:
- Do you know someone interested in learning about real estate with a lot of time on their hands but not a lot of money or knowledge?
- Do you know someone really really good at crunching numbers, evaluation risk, and reading contracts but not very good talking to people or in social situations?
- Do you know anyone with a large amount of money who trusts you, but who doesn’t have any good investment opportunities?
- Do you know someone who knows a lot about real estate, has a lot of contacts, and has some experience, but isn’t in a situation in life where they have the capital necessary for investing?
If so, you have some great potential partners on your hands! As the entrepreneur, it’s your job to look at the skill sets of the people you know who are interested in making money, and find a way to use that skill set to help you both. Get in the habit of asking yourself what you can see different people in your life really excelling at, then make mental notes of how you could provide that opportunity for them if things were different. Someday, things may be different (you may make them different) and you’ll want the practice of having evaluated the abilities of others and thought of ways to help them use them. Most people are full of so much potential, but either don’t know it or don’t know how to use it. Unlocking the power of others can be wildly rewarding both personally and in your business. Don’t ever forget about the power of partners!
Any thoughts on using partners to help your business success stories of your own? Please share them in the comments section below.