My partners and I are looking to find good equity partners. I have seen some posts on here about what % equity to offer the equity partners, but haven’t come across many about finding good equity partners (besides people asking for them on here and not getting many responses). Can someone please tell us how to find good equity partners, how to convince them to work with us and how you structure the deals with them (i.e. do you have a JV company that you own together or do you just have an agreement that states what everyone is responsible for and what the split of the profits will be?)? We are finding great deals in San Diego and in Alabama to either fix and flip or buy and resell with owner financing for big returns. We have a good team and a good system ready to go, but without the cash we can’t get the deals. Hard money is an option, but too expensive and they want us to have as much as 20% into it. We would like an equity partner that will put up the money for the purchase and the rehab, we will bring the deals, do all the work and sell it (with our agent). Is a 50/50 split of profits appropriate for a deal like that?
You can find plenty of equity partners. All you need to do is say i will put up 50% cash and the equity partners put up 50% cash. Correct me if I am wrong you want a 100% equity partner and you split everything 50/50.
To answer some of your questions.
Can someone please tell us how to find good equity partners.
Talk to your Dentists, Doctors. Go to your country clubs and ask if you can do a real estate investment presentation. Don’t try and find partners maybe ask for loans that you can pay a higher percentage than what they would earn on other investments. Say like 12 to 13%.
You can have more than 1 person loaning you the money. You can put them on the deed or title for collateral for their loan.
You can do an equity share with the plumber,electrician,carpenter if you don’t have the money to pay them up front. Sometimes you have to be creative to get things going.
How to convince them to work with us.
Have you done any deals that you can show them your experience?
If not, I would make a very good resume stating all the experiences you have that would relate to these types of projects.
How you structure the deals with them.
Get every detail in writing before you start anything. What the split is, who is to do what, right down to every detail. Even your exit strategies.
I have an equity partner that I split 50/50 with. He puts up 100% of the money and I do the rest.
Which means I find them get them rehabbed and sold. He lives in another city and hasn’t seen one property yet. We have done over 30 together so far.
If you have the experience in doing this you won’t have any trouble finding partners.