#rentalproperties

Welcome back to another podcast episode! This week we’re doing a deep dive into partnerships in the world of real estate investing. We’re so excited to share with you the different types of REI partnerships, how we have structured our own partnerships, and also things to consider when it comes to implementing partnerships in your own REI business. 
 

Two Types of REI Partnerships: Debt & Equity

Equity Partnership

With an equity partnership, both parties are owners of the property. They both have a piece of the pie. And while your partnership style will depend on exactly whom brings what to the table, in the end, you both own the property.
 

Pros of Equity Partnerships

Equity partnerships allow you to buy more property, with more credit available and more funds available in general. Also, with equity partnerships, you are merging two strengths together, making for a very powerful partnership and two parties who are typically willing to really give the project their all.
 

Cons of Equity Partnerships

If you wind up not getting along with your partner, in the long run, that can get quite uncomfortable. Make sure that every so often you reassess your partnership (agreement) and its functionality. It also typically comes with a longer timeline because these types of partnerships operate for years. Make sure the person you partner with is someone you get along very well with. 
 

Also, many people don’t want to split the piece of their pie. And while 100% of nothing, is still nothing, you need to make sure you have a strong operating agreement for things that might come up. This partnership reduces risk and increases the availability of capital between the parties.
 

Debt Partnership

A debt partnership is at the very simplest, a loan. Think of it just like you are borrowing money from a bank, except these funds are coming from an individual person (often referred to as a ‘private investor’). This type of partnership and loan comes with a specific timeline, interest rate, payback period, etc. 

Pros of Debt Partnerships

These partnerships are often much shorter, and once you’ve paid back your investor, you’re all in, on your own. There are also a lot of people looking for dept partners - maybe they have extra money they are looking to invest and you have the know-how and expertise to allow them to invest with your REI project. Ultimately, in our opinion, the biggest pro of debt partnerships is that they are short term and once you’ve paid back your investor, the property, and income, are all yours. 

Cons of Debt Partnerships

Debt partnerships typically come at a higher cost. You have a higher interest rate to borrow private money, so typically you have a much shorter timeline for these; BRRRs, flipping, etc., where there is an exit strategy and end of a timeline. These types of loans also typically last under one year and you must pay off the loan in full by the end of that year. 
 

How To Find REI Partners

A great place to look for equity partners is in your own backyard. Talk to family and friends, interact with colleagues, and post on social media that you’re looking for new partnership opportunities. Show them what you’ve done, what you are currently doing, and build that ‘know, like, trust’ factor with them to make them want to know more. Another place to find great equity partners is through your local real estate investing groups and meetups. All of the people in that room are already interested in what you do, so look there to network and structure new partnerships. 

To find debt partners, look for investors who already have that extra money. Whether it is equity in their home, a self-directing IRA, or someone with a higher income (doctor, lawyer, etc.) but who doesn’t have the time to do the project themselves. These kinds of people typically want to be hands-off (ideal for a debt partnership), so you are their boots on the ground. 

Tips for Partnering

1. Put yourself out there and don’t be afraid to ask for partnerships, but don’t try to partner too early.
2. Negotiate and include a management fee if you will be doing the property management yourself. 
3. Make sure you outline a reassessment of your partnership after 1-2 years. 
    

A final piece of advice about partnerships:

Be cautious, but optimistic.

Thank you so much for listening! We would also LOVE to hear more of your burning REI questions or episode ideas so shoot us a DM on Instagram! 

See you in the next episode!

Resources:

• Join the MTR Profit Academy
• Connect with us on Instagram

Myles lives in Scottsdale, AZ and has a fascinating story to tell about going against the herd when it comes to investing. Psychologically this is one of the most difficult things for a human to do, but when you're able to, the rewards can be massive. 

We discuss Myles early days in corporate America. What it was like moving to Los Angeles from Australia, then returning to Australia 6 years later, then deciding to finally return to the United States for good. 

We discuss the pitfalls of real estate investing, what to do and what not to do. How you can build a rental property portfolio from scratch. The proper way to view debt and leverage, and common mistakes many rookie investors make. 

Myles suffered from Covid last summer. He describes what that was like. After hearing his story, it really makes sense why the elderly or already-sick can be especially vulnerable to this virus. 

We discuss what to expect in the economy once Covid lockdowns are finally over; where to invest your money, time and energy right now so you can profit when things finally get back to normal. 

"I'm really different.  Not in a bad way, but I will challenge your audience to question social norms and think outside of the box in order for them to break free of the statistics of being a wage slave and never retiring.  I'm living proof that it can easily be done and I love to share my story." – Myles Wakeham

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If you're a renter or fortunate homeowner, listen in when we talk with Tammye Treviño, Executive Director of the Bexar County Housing Authority about the challenges to keep your place home: Renters that are cost-burdened and homeowner circumstances that affect ability to pay/repay. And this episode doesn’t just pertain to low-income or affordable housing programs but also foreclosure and eviction moratoriums. Renters: COSA and Bexar County TRAM programs for eviction prevention and temporary assistance with rental payments/eviction process/assistance. Homeowners: Mortgage deferrals and forbearance programs Refinance Programs/Loan Modifications/foreclosure process/assistance Ms. Tammye Trevino is the Executive Director for the Housing Authority of Bexar County (HABC) where she manages a $30-million-dollar public housing agency that administers Affordable Housing Developments and Housing Choice Vouchers with related self-sufficiency programs for low to moderate income families. As a Public Facilities Corporation, HABC owns 100% of 3 multi-family developments and is in partnership with other owners of additional projects through the assistance of the U.S. Department of Treasury’s Low Income Housing Tax Credit Program and local bond authority from the Bexar County Housing Finance Agency. Previously, Ms. Trevino served as a political appointee for the first and second term of President Obama’s Administration from 2009 to 2017. She was first appointed as the national Administrator for USDA’s Rural Development, Rural Housing Program where she administered a $25 Billion budget, $100 Billion loan portfolio and 16 programs targeting low and moderate-income families in Single Family Housing/Mortgage Lending, Multi-Family Housing and Community Facilities. She engineered new programs, delivery models and regulations that met the needs of the population served and contributed substantially to efforts to expand credit management programs into rural areas via nontraditional methods and supervised credit arrangements with individuals, developers and banks. Her desire to delve into urban matters led her to the U.S. Department of Housing and Urban Development under the Administration’s second term and she moved back to Texas where she was appointed the Regional Administrator for Region 6, overseeing all HUD activities in Texas, New Mexico, Arkansas, Oklahoma and Louisiana. From 1999 to 2009, Ms. Treviño served as chief executive officer for FUTURO, a Uvalde, Texas, non-profit organization providing housing, business and community development including a micro-lending program for small businesses. She also served as the economic development director for LaSalle County, Texas, where her accomplishments included a lead role in converting a 47-county, South Texas think tank into a non-profit organization to work on regional economic development responding to the changing needs of its growing, and largely Hispanic population.

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