Why Partnering Is A Must In Multifamily Real Estate
The Challenges of Multifamily Real Estate
There are many challenges that a new real estate investor faces when starting their journey. So many questions go through your head that can often create limiting beliefs and hinder your progress.
“I don’t have enough experience.”
“I don’t have enough capital.”
“I don’t know any other Multifamily real estate investors.”
“Why would someone give ME $100k to invest in a deal?”
“How am I supposed to find deals, know how to analyze them, take them to closing, bring or raise capital, and operate the property by myself?”
There are a lot of different solutions that can help crush these limiting beliefs and solve your challenges, but the biggest one is partnering with others.
Partnering Works
When I entered the hospitality industry at sixteen years old, I never anticipated staying there long. Most people don’t grow up thinking, “I want to work in restaurants when I grow up.” However, as I learned more about the business side, I quickly grew a passion for excellence in service & operations. This led me to meet many great people.
One of the great people I met was someone who I eventually ended up partnering with to start an entirely new cafe concept from scratch. How did this happen? After years of sweat equity, relationship building. Ultimately, both parties understood that in order to be successful, you need to leverage other people’s strengths.
After more than ten years of working together, my partner and I formed a relationship where we both win and bring something valuable to the table. This was my proof that this strategy could also be applied in real estate.
False Start
Like most people, I started with a “I’ma” mentality – I would attempt to do everything required to take down a single family home. After more than twelve months of grinding, doing some deals, and realizing I would not be able to scale as fast as I wanted to in order to reach my early retirement goals, I decided it was time to crush all those limiting beliefs previously mentioned by partnering with others to accomplish something greater.
Leveraging Other People’s Skills
Everyone has something to bring to the table. There’s a saying that you can either “seek to serve, or pay to play.” This is true in the Multifamily space. While you definitely do not want to be broke, there are other elements that you can bring to the table to bring value to other partners. To be straight forward, my response to all the questions above are as follows:
“I don’t have enough experience.”
Me: Find someone who does and bring value to them in an area they are lacking.
“I don’t have enough capital.”
Me: Find someone who does and bring them a deal or opportunity.
“I don’t know any other Multifamily real estate investors.”
Me: Network. Get out there. Attend your local real estate meetup that focuses on whatever asset class you prefer. Join Facebook groups, LinkedIn groups, and conferences which are now often online to meet people in the space. Join a mentorship group or mastermind with like-minded people.
“Why would someone give me $100k to invest in a deal?”
Me: You have to realize that you are providing a service and opportunity to investors, not just taking their money. That is valuable to someone who is a busy professional who doesn’t have time to chase real estate opportunities but still wants to invest in real estate. You have to build your credibility with them and your credibility so they know, like, and trust you.
“How am I supposed to find deals, know how to analyze them, take them to closing, bring or raise capital, and operate the property by myself?”
Me: That’s easy… you don’t. Are you good at finding deals? Great – find someone who is good at raising capital to take them down. Are you good at networking to raise capital? Great – find someone who has a deal. Do you have a passion and interest for asset management? Awesome – find an operator who doesn’t like asset management.
Partners Bring Value
There are so many moving parts of a deal; this is not something you want to do on your own. The biggest, most successful operators in the multifamily space have a team of people working to acquire these deals and operate them well.
You don’t have to be good at everything to be successful in Multifamily. In order to bring value to partners, you have to figure out what your “superpower” is in the Multifamily space. Some superpowers include:
- Finding Deals (Through Brokers or Off-Market)
- Raising Capital
- Marketing
- Asset/Property Management
- Networth/Liquidity
- Prior business experience building systems
- Construction
- Previous Multifamily or Real Estate experience (track record)
What’s your superpower? Which one can you bring to the table if you were to find a partner tomorrow? The same question can be asked in reverse – what are you NOT good at? The things you are not good at or interested in tell you exactly what type of partners you need to find.
Closing A Deal
Out of the list of superpowers above, all of them are required to successfully close on a property and operate it well. While you may be one of the rare people who is good at all of the items above, there is not enough time in a day for you to do all of those tasks. That’s where partners come in.
When a good deal is found, one of the things most important to the seller/broker is if you can close. That doesn’t just mean do you have enough money to close. It boils down to who is on your team that can help you close. If you don’t have partners and team members/vendors in place to help, the seller may choose someone else simply because they know you cannot do it all on your own. You’re likely to have issues closing.
Want to close more deals and scale faster? Go find partners you have an alignment of interest with. Find people who have integrity and make you want to wake up everyday and do business with them. After all, you’re entering into a long-term commitment.
How To Find Partners
When I was entering the space, I often asked myself and others “how do I even find a partner?” No, you don’t walk around asking people “want to partner with me?” That’s a big red flag. You have to let things happen naturally. The best partnerships often start with just a simple conversation that goes well and a follow up conversation. Ideally in this conversation, you would make it clear what your “superpower” is so others know if there’s even an opportunity to align or partner with you.
In order to have these conversations, you have to be out there meeting people. While it was definitely a challenge not being able to network in person in 2020, technology has had a massive, positive impact in our ability to network across the world.
There are virtual meetups in the real estate space happening daily at all parts of the day. Go on Facebook, LinkedIn, and websites like BiggerPockets to find them. When you get in, network with others and leave a good impression. Get their contact information and follow up with them. This is how relationships are formed that may eventually lead to a partnership.
Now get out there and “make it happen!”
“Want to learn about why you should be partnering with others to invest in Multifamily? Visit www.blueoakinvests.com/whyrealestate to get your free guide to learn more. You can also reach out by emailing Brian directly at brian@blueoakinvests.com.”