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Investing in Real Estate Using Equity Partners

This is one of my favorite strategies. With this strategy, you’re truly only limited by your own imagination. Anyone can use it regardless of their credit situation or lack of capital. It’s used everyday by investors large and small. It’s used to buy single families, multi families and even large apartment complexes and strip malls. It’s even used by fortune 500 companies in their various business acquisitions. Bottom line… Equity Partners is the way to go.

So how do you find an equity partner? Equity partners can be friends, family members, colleagues or perfect strangers. As long as long as they possess qualities that you don’t have (i.e. capital, credit, expertise or even time to manage the property) you could use them as a business partner or just a partner for a particular deal. If you’d rather not deal with family or friends, believe me, I can understand that. One way to find equity partners is to join your local REIA (Real Estate Investor Association). Most REIAs have monthly or weekly meetings at local hotels or conference centers.There are a few of them here in Connecticut. Email me here for more information on REIAs in your area. Another great way to find them is to find high net worth individuals that are looking for a higher return on their investments. This can be your family doctor, attorney or even your financial adviser. You could even find individuals that currently own investment property and ask them to partner with you on a deal or two. One thing that I’d definitely advise you to do is to be aware of the SEC (Securities and Exchange Commission) rules and regulations governing solicitation of investors if you’re planning to talk to someone out of your immediate circle. You don’t want to end up in deeper debt via fines and penalties by illegally soliciting. I’m currently writing a book on finding funding for your deals. Email me here and I’ll send you a copy when it’s ready.

Deal structuring flexibility is another great advantage with equity partners. As long as it’s a win-win situation for all parties involved, you can make a lot of money using this strategy. Let’s say you have plenty of cash available but you have bad credit due to unfortunate circumstances that may have occurred in your life. You could structure the deal where as you and your partner set up a business entity such as an LLC (Limited Liability Company), then you use your partner’s credit to finance the property and use your cash for the down payment. Or let’s flip that scenario. You have good credit and your partner has the cash but he’s uncomfortable splitting the deal 50-50 because he’s putting up all of the money. You could structure the deal whereas he owns 75% and you own 25% of the property. You then agree to manage the daily responsibility of the property and you have the option to buy back equity at a set price until you own 100% of the property. So as you can see, using equity partners is extremely flexible and only limited by your own imagination.