How is it that some people can do their first apartment building deal in 90 days?
Now, if you're curious about the answer, then stay tuned because I'm going to share with you what I call my freedom accelerator. How to get started with apartment building investing by leveraging your strengths and quitting your job sooner by essentially, partnering.
If you want to find out how to do that, stick around.
I wanna share with you, so you can see how partnering can be so powerful – a story by one of our student’s name is Andy Vaughn. One of the things you have to know about Andy is he really doesn't like Excel spreadsheets, right?
The sheer thought of spreadsheets makes him want to do bad things to himself and others. But what he loves to do is chat with people, and he loves to play golf. So what does he do to play to his strengths?
Focus on Your Strengths
Maybe he won’t become a deal finder because he doesn't love analysis. This isn’t really a detour, but a migration where he focuses more on raising money.
What he ended up doing was partnering with another fellow who found a 36 unit in Greensboro, North Carolina. Through their partnership, he helped him raise the remainder of the $750,000 that he needed to close that deal.
So they did a joint venture together where Seth, the deal-finder and Andy, the money-raiser were able to play to their strengths and finish out the deal together. It turned out to be a great joint venture!
Since then, Andy has gone on to do three additional deals and raised another $760,000 for other experienced operators. Now, without joint venturing, he would have had exactly zero deals.
This is a Team Sport
This is what I want to get through to you guys. Apartment building investing is a team sport.
The people that try to go at it alone will eventually get there, but it's going to take a long time. They typically tend to do small deals and scale up very slowly. There’s nothing necessarily wrong with that at all, but it's much more exciting to do it with a team behind you.
Joint ventures can include two people, like the team I just shared. But sometimes, you can even have three or four people playing to different strengths.
6 Different Types of Partnership
So that's a great example of how partnering will accelerate your deals and help you get their quickly in about 90 days because you aren’t handling all the pieces yourself.
Let’s go over 6 different ways you can partner with others for apartment building investing: First, maybe you’re a deal finder, you love making offers, analysis, and numbers. Number two, are you a capital raiser, like Andy. You enjoy networking and are a people person. Now if you can do both, that's great.
If you consider yourself to be a fantastic generalist, I would encourage you to partner with other people to get stuff done faster. But if you're both, that's a great leg up number three.
So what if you don't have the net worth? Let’s say you’re doing a larger deal, like a $5 million deal, and you don't have the $4 million net worth to secure the loan. What do you do?
Well, you bring in a partner. You don't go, “oh no, what should I do now? I don't have the money to do it.” No, you bring in a partner that has a net worth.
If you have the net worth and you're the one listening and watching this, then it’s a great opportunity to partner with people who have great deals but don't have the net worth.
Number four is if you don’t have any experience. So if you don't have the experience, then guess what? You partner with an experienced operator who does have the experience.
Sometimes you need it to qualify for certain agency loans like Freddie Mac and Fannie Mae. Then bring someone on, make them kind of a silent partner or a co-guarantor. That's how you eliminate that shortcoming.
If you're not an operator and you don't have the experience to be an operator, and you don't really want to operate a deal. Once this closes, then again, you partner with an experienced operator who does great partnerships.
Do you prefer to be a passive investor? Well then great. That's another six ways that you can joint venture with someone. If you have the money but you don't have an interest in being an operator, then you partner with an experienced operator.
So there are six ways really to joint venture with people. My observation is that people who have done that can greatly accelerate the speed and the size of that first deal.
Hopefully, you’ll strongly consider joint venturing to get your first deal done in as little as 90 days! See ya next time.