Insider tips to increase your real estate investment number
Real Estate

Insider tips to increase your real estate investment number

So far, it looks like this year will continue to be a very busy year with new opportunities and bargains. In the world of real estate investing, last year showed us that there were still some good opportunities (including tax-advantaged opportunities in the GO Zone) and that the financial world for investors is constantly changing. One theme that was common among some of the real estate investors I have been exposed to is that even though there were additional real estate opportunities that they wanted to invest in, they decided to pass up the opportunity because they were financially and credit drained. -wise.

While what I’m going to say next isn’t rocket science, I thought we’d be off to a good start before the middle of the year. If you want to increase the number of investments that are in your portfolio and don’t want to pass up real estate opportunities that you would normally jump at when you’re not completely depleted, then form a partnership!

SO WHAT IS AN ASSOCIATION?

For those of you who crave the details, you can search the internet and find many definitions of what an association is. For the context of this article, a partnership is basically a relationship of two or more entities that conduct business for mutual benefit. That’s it – Simple and to the point! The key thing I want to point out is that a partnership is beneficial to all parties involved. As I like to say, it has to make “business sense” for everyone involved.

APPLICATION OF COMPANIES TO INVESTMENT IN REAL ESTATE

There are many real estate investors who have the time and knowledge to find and evaluate new opportunities. However, after a while, they run out of credit and funds to take advantage of opportunities and continue to add to their real estate portfolios. However, there may be investors who have the money and do not have the time or knowledge to evaluate opportunities. Usually it is the lack of one of the above (ie time, knowledge or money/credit) that begs for a partnership to form. Or put another way, if you have one of those elements, then you may be a great candidate for a partnership!

MAKING IT ALL WORK TOGETHER

Have you ever heard of the saying “Don’t do business with friends”? In real estate investing, as in most other businesses, some of the best working relationships are between like-minded people with the same goals and visions (but not necessarily the same characteristics, see below). If not approached correctly, forming a business with friends can break the friendship. All I am saying is that you should choose your business partners carefully. Good friends aren’t worth losing, but nothing will tear friends apart like a business gone wrong.

Choosing your partners in any company is key to any successful partnership. While all components of the partnership must be in place (ie knowledge, time, and money/capital), there must be synergy between each of the partners based on their individual functions and roles in the partnership.

As an example, if you are the person with the knowledge and are looking for a financial partner, you are most likely looking for someone who is familiar with real estate investing but may not necessarily want to do all the research and analysis themselves. That is something that would end up duplicating efforts and would not be the best use of resources in the alliance. Look for complementary traits that balance traits that already exist (or balance your own traits). Regardless of the missing part, you are looking for someone who is honest and fair and has good business sense.

FORMALIZE THE RELATIONSHIP

There are many ways to structure an association using the above definition. The exact details may vary from state to state, depending on which road you follow. Since this is a business relationship, treat it as such and go ahead and form a legal entity. Note that there are many other benefits of doing so that are not covered here and could be the subject of many articles below.

As an example, you might want to form a limited liability company (LLC) that would cover a particular type of investment (ie rental properties, land investment, etc.), or cover a particular location (ie southeast , Southwest, Mississippi GO Zone region) or states (ie Florida, Texas, Arizona, etc.) for investments. An LLC is formed by filing a set of “Articles of Organization” with the Secretary of State for the particular state in which it is being formed. Please note that the LLC is not a tax paying entity. Gains, losses, etc. they flow directly and are reported on the individual member’s tax returns. Most states require the LLC to have an “Operating Agreement” between the members of the LLC on how the LLC will be managed, etc.

However, you may want to form a true “partnership” or limited partnership, rather than an LLC. There are many different ways to structure and everyone has their own opinion and reasons for one way over another. Whichever path you choose, make sure all parties involved are aware of and agree to the structure, any operating agreements, etc. Also, since the requirements for structuring and establishing a partnership, LLC, etc., vary from state to state, it is best to get professional help in setting up your entity. As mentioned above, a properly structured entity has many additional benefits.

INCREASE YOUR POTENTIAL

With or without a formal structure in place, you can see the benefits of partnering with others to increase your real estate potential. Let’s say you’re a member of a real estate investment group and you’re constantly getting quality opportunities in front of you. With Endless Credit, it’s your job to do your own due diligence on the project to see if it meets your investment criteria. If so, all that remains from a higher level is to obtain the financing to finance the project and add it to your portfolio. One day your friendly banker and loan officer will walk up to you and say he’s sold out; your existing finances cannot support any additional projects. Aside from freeing up capital through the sale of other properties, you can find a money partner to supply the missing piece.

By partnering, you’ve done more than just add the extra project to your portfolio (which was your initial goal). He has now introduced someone to the real estate investment world and may have created a great sounding board for additional projects, businesses, etc.

ABSTRACT

Investing in Real Estate is a true team effort. To be successful, you need to have the elements of time, knowledge, and money working together. Limitations in one of these elements can greatly hinder your real estate investment opportunities. By partnering with others, you can increase your total number of investments and never miss out on a great opportunity again.

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