Welcome to Cleveland real estate investor. On this podcast, you'll hear about every aspect of the real estate investment business. You will talk to your rockstar investors about their businesses, how they built them, where they came from, and where they're going. Who am I? I'm Joe Lieber and I've made millions of dollars from the real estate investment business over the last 20 years. If you're ready to hear the good and bad from a guy who's learned this business from the school of hard knocks and get educated by some bad ass entrepreneurs, then put your helmet on, strap on your chin strap. Let's ride.
Hey guys, what's going on today? Thank you for tuning in. I got a good episode for you today, and we'll talk to you today about investing with partners. I did this for a lot of years. I did some things wrong. I did some things, right, but I'm going to talk to you a little bit about it today and try to help you avoid some of the pitfalls of this is what you want to do. I think investing with partners can be great, especially if you're starting out in the business and you don't have a lot of money, or maybe you don't have the knowledge or energy to find contractors. Maybe that could be a good partnership, but I'm going to tell you some of the things that I did and then just let it resonate with you a little bit and see if it's a, you know, spring some ideas or this and that.
(01:37): So, you know, 22 years I've been doing this for I've mentioned a couple of times. And I think when I first started out, like the first partnership I did and it had to do with, you know, money really, cause you couldn't, I didn't know where to get financing or anything like that. So I had a buddy who had a job who was able to show income and he had some construction experience. So I figured this would be a good opportunity to partner with someone. You know, we were just young guys. We were 19 years old buying our first flip. So we did that. He went out there, he was able to get the financing for us and had some basic construction knowledge. And it was good. It worked out, but some of the issues we had were we're both operators, right? So we were both 50, 50 partners and we're saying, Hey, you know, let's work on this property together and we'll flip it.
(02:27): So we had disagreements, right? Well, like the first thing was the kitchen, right. You know, should we update it? Should we not? And then once you decide, okay, yes, then it's an Oak cabinets. Is it mahogany cabinets? And then should you do windows? And what color should they be? And everyone has a different vision. Cause there were two, you know, cooks in the kitchen basically. And that can be a challenge. People have different visions. And then as you're going through the process, you know, things can change, you know, all those late nights there when you're working hard, you're thinking I'm not selling this thing for less than 200 grand. Well, the issue is, although it's your blood, sweat, and tears and your hard work, it's not a $200,000 house and that can happen or a partner might say, you know, man, I think I just want to keep this as a rental that our partners like, nah, man, like we had the idea to fix us up and sell it.
(03:18): And that's what we gotta do. So my advice to you is if you're going to do a partnership, make sure your roles are really defined. And I didn't do that on an initial one and you just learn. And then I went on to do other partnerships after that. And a lot of them were just financial partnerships and those were much, much better. But you grow when you go through this process, you're going to grow, you're going to change. You're going to evolve as a person. And your terms will change a partner. You start with now, you'll have to understand that. You'll both have to understand things are gonna change over time. And a lot of it sometimes because one partner thinks they're doing too much work and the other one's reaping the rewards of your hard work, which can happen. And a lot of times that could be true.
(04:07): And if you're 15, 20 deals deep with that person, maybe the interest rate needs to be lower. Maybe the terms need to be different. So you should always constantly look at that. I do joint ventures now with folks, folks come to me and they might say, Hey, you know, I have a house, but on money, all right, great I'll fund that. Or sometimes people come to me and say, you know, I don't have a buyer for my home. And I brought, you know, maybe a turnkey buyer to a property and charge a fee for that as a joint venture partner, or sometimes I'll bring acquisitions and financing, they can bring operations. And there's really four keys to this there's acquisition. As a component, there is the financing or money piece to this component. Number two, there's operations or rehab, which is component number three. And then finally dispositions selling the property.
(04:58): Whether you're putting on MLS selling at retail or you're selling a turnkey, there's really four components to this. And I've seen that's what makes a good partnerships. You know, before I answered into a lot of deals where I was doing three out of the four of those things and splitting profits with a partner, 50, 50, and over time, I was the one doing all the work and those partnerships don't work out. They have to evolve and change. And some of them went away because I had some on my partners spoiled, right? They only had to put up a little bit of money or use our credit to get financing. And I was handling everything else beyond that from identifying the asset to rehabbing it, to selling it. And I, I didn't want to split profits anymore. So equity percentages had to change and things like that.
(05:51): And some partners stayed on and we're still friends and sometimes do things to this day and some of the relationships did not. But I think whoever you enter into a relationship with really define your roles, put it on paper because you really need to put it on paper and know that can be a little bit fluid. It can change per deal really, or every six months or a year. You should look at that with your business partner and say, Hey, how do you feel about this? How do you folks feel about the terms? You know, we on the same page still because when you don't communicate, that's why people get mad in business. I've noticed that more than anything with anyone, from my tenants to my joint venture partners, to lenders communication is the biggest thing. It saves a lot of fights. So if you're going to do this document, everything, don't make a deal over a bourbon on Christmas Eve and then expect that to be the same thing.
(06:48): Six months later, I really, really would advise you to document everything. So trying to think of some more of the, the relationships I had, but that was my biggest thing is I went through a period of time there where I was doing. I didn't call them joint ventures back then, but I was doing deals where I wanted to buy houses and sell them on rent zone. And I was just doing everything. And I would bring in particular, high net worth guys who could either pay cash or obtain financing. And it really didn't work out that well. Cause like when there was turnover and stuff, the partners never wanted to come in with half the cash. And like there's so many crazy stories about that. That I'm really want to go down that road. I prefer to do things on my own now, but thankfully after all these years, I'm able to do that.
(07:31): Now it took a long time to get that. My best advice for you is just to bring in a financial partner, really, if you're trying to acquire real estate, you know, the acquisition pieces, it can be a lot of work, but it can be done by an individual. And the money's the hardest thing to get. So I would look for partners who can help you financially and then getting contractors. There's so many websites out there and stuff these days that you can just meet different roofers and plumbers and handyman, and you can put together a rehab now selling. It can be a challenge depending on how you're selling it. If you're doing retail flips, well, you know, any real estate broker can list the house and sell it. But if you're going to sell turnkey, it's a little bit more of a component where you might need help, you know, through a partner or like a dispositions person, someone who specializes in that.
(08:25): And that's a whole nother process, but I would look for the finance piece. I joint venture with people now. Well, because I have some money, which helps that you're able to really leverage on other people's abilities who want to get into the game, which is cool. And you can watch them grow. This is what happened to me. Other people looked at me as a young boy and said, Hey, you're a young guy, gala energy run and I'll fund you. And that worked out really good for a long time. So now I'll go. A lot of times I'm bringing acquisition or sometimes I have folks call me with an acquisition and say, Hey, I got a great house over here, but I need financing. And then, you know, they can handle the operations, but then also can make to me and say, Hey, I want to sell this turnkey.
(09:07): And I need a buyer. And I have a lot of buyers in national and international buyers. And they have, I placed my investors in these properties as well as turn key passive asset. So that can be cool. Really cool for everybody. But that's what I would recommend is if you're going to invest with partners, I don't think it's a bad thing done correctly. Make sure you define those roles and don't make some of the mistakes I did. You'll save you a lot of headache. Thanks a lot. Thank you so much for tuning in today. Have a great day.
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