Investing With Partners

Investing With Partners

Investors often believe that in order to invest in a property they need either a large amount of cash or at least a perfect credit history in order to get a loan. But in reality, there are various non-traditional ways to raise finance for an investment that require neither a good credit history nor a large cash balance.

Investors often believe that in order to invest in a property they need either a large amount of cash or at least a perfect credit history in order to get a loan. But in reality, there are various non-traditional ways to raise finance for an investment that require neither a good credit history nor a large cash balance. One such non-traditional source of financing is partnering with other investors.

Partnering with other investors is particularly advantageous in three scenarios. The first scenario is where you simply don't have the kind of cash or credit required to structure an investment deal. In this case, partnering with other investors enables you to raise the finance without having to put in any cash of your own. Meanwhile, you will gain equity in the investment based on the work you put in. And because the partnership is an "equity partnership" - meaning that each investor gets a share of the equity in the home plus any corresponding profits - then neither do you need to pay any money back.

The second scenario is where you have the resources and no real need to partner with other investors, but do not want to shoulder the entire risk of the deal on your own. In this scenario you seek investment partners simply to split the risk. Obviously, you share the equity as well, but for cautious investors looking for opportunities to play it safe, such partnerships are a good low risk low return option.

The third scenario is where you partner with one or more investors for not just one, but a number of property deals. Such a partnership is based not so much on sharing the burden of financing or the risk of the investment, but on the opportunity to benefit from shared skills, knowledge and efforts, which, over time, is likely to yield greater profits from a larger number of deals.

Where you are not providing much or any of the finance for a deal, your partners will finance the deals using either their own resources or borrowings based on their individual income and credit standings. Your contribution is essentially the work you put in. The deal may be "split" in a number of ways, equally, in your favor, or in the favor of your partner(s). Just be sure to consult an attorney to prepare all the required legal documentation to establish the partnership. For example, you will generally want it to be limited liability partnership where each partners liability and share of profits are specifically defined and limited. The agreement should also detail each partners rights and responsibilities, and the process for resolving any disputes.

Whether you partner with other investors out of necessity or choice, you may find that by working with others, you can get involved in pre-foreclosure investing much faster, be able to do more deals, and generate more profits

About Author

Rosanne Cellini has been successfully investing in real estate for several years. Her latest project has been delivering timely information about the foreclosure market to investors eager to learn more about this niche. To find out more information about how to structure and finance pre-foreclosure property investments, check out my website at http://www.foreclosurespotlight.com

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