Partnerships

By Tony Youngs

If you have everything you need to run your business, there’s probably no need for a partnership. A good partnership is created by finding someone that has a gift, talent, or resource that you don’t have.

An example: Maybe you are good at finding and acquiring great deals, but you need a money partner. Or you are good at repairs, but not good at managing tenants.

There’s a little more to consider when seeking a partner. I have had many partners in my real estate business and I have much experience to share that may be helpful in your future endeavors.

When you find someone that seems to be a good fit, check court records for any civil suits, and find out if they have any liens or judgments against them – you don’t want anything to attach to your property deals. Also, do a Google search to see if any bad publicity exists. You can’t believe everything on the Internet, but your customers and associates may see that content and pre-judge your business.

I like to spend time with a potential partner by going to dinner, meeting at coffee shops or even taking in a baseball game to get to know their character. Do they have good values or do they have a screw-people attitude? Do they have a good work ethic or do they brag about being lazy? I always ask if they play golf because you really find out a person’s true character on the golf course. I saw an interview with President George W. Bush where he said if you play golf with someone, you will find out if they are honest people. The two absolute best partnerships I’ve ever had are the folks with whom I play golf.

I remember my very first real estate deal, a single family home that was in pre-foreclosure. The owner wanted to sell at a great price. I had plenty of energy and ambition but did not have the money to buy it. I went to my father, who was a wealthy investor, and asked if he would partner with me. He was reluctant at first but agreed to fund the deal for a share of the profit. I was so grateful and I had the attitude that I wanted it to be successful for him more than myself. I wanted to make it work and show him I was a good partner and he could rely on me. Afterward we did many deals together and they were all successful. I have had many other partners because I was always good at finding deals. That attracted many other potential partners. People would approach me wanting to get involved, so I never had to seek out future partners.

I have owned rental houses with partners that always worked out well. I was always good at managing the properties and doing any needed repairs, while the partner was excellent at keeping the records, doing the taxes, and dealing with tenants. I have had partners that were good at maintaining HVAC and electrical systems on rental housing, which goes a long way in making successful ventures.

On the other hand, there can be partnerships that work very well for a while but then come to an end. That is why you need a written agreement, a document to cover the “what-ifs.” Spell out exactly what happens if your partner suddenly dies or gets very sick, or what happens if greed takes over and the partner wants out and takes everything you built together. What happens if your partner gets a divorce and their spouse wants it all? These are things that can happen and you should cover them in a written agreement.

I personally have had similar things happen in my partnerships, but I have always believed in “you reap what you sow.” I have always tried to be a good partner and have my partner’s best interest in mind. In return, I have attracted partners who seem to be the same. They go the extra mile to be a good partner and we have enjoyed very successful partnerships. They have an “I’ve-got-your-back” kind of relationship, which is golden.

Tony Youngs has been an investor, trainer and a national speaker for more than 32 years. He is the author of The Hidden Market System and is best known in the industry for his “Hands on In the Field” trainings that take place around the country. Learn more about him by visiting www.tonyyoungs.com.

out on the opportunity of becoming homeowners? The post-housing recession legislation was supposed to stop “too-big-to-fail,” and it hasn’t. The irony is that seller financing wasn’t at the heart of the Great Recession. In fact, the Consumer Financial Protection Bureau (CFPB) noted that private investors are NOT a financial risk to the country and finance markets. Seller financing limitations were the result of an unintended consequence that needs to be resolved.

National REIA continues to work to develop cosponsors with leadership like the sponsor of HR 5013, Rep. Vicente Gonzalez (D-TX) and many others to address this particular error. The current bill is titled, “The Affordable Homeownership Access Act.” The title references the fact that many banks cannot afford to provide sub-$100,000 mortgages, which limits affordable homeownership options for many individuals, especially those who are self-employed or traditionally unbanked.

Exploring and opening capital to the affordable housing market is essential – so much so that a 40page research project was commissioned. The Housing Finance Policy Center’s April 2018 research report, funded by the Urban Land Institute and Federal Reserve Bank of Chicago, noted that, “for homes sold for $70,000 or less, one in four sales was financed with a mortgage.” The majority were cash sales by investors, often becoming rental property. While National REIA is fully supportive of investors buying property, potential homeowners being institutionally blocked from housing, especially first-time home-ownership, creates a problem in the market and blocks access to capital for individuals unnecessarily.

The $70,000 threshold may seem like a non-issue in this period of rapidly inflating housing prices, however, there are still substantial numbers of low-cost housing areas around the country affected by the mortgage limits, and additionally, inflation will raise the amount seen as “too low” to deserve a mortgage. While housing prices may not currently reflect Zimbabwe or Weimer Republic escalation, as costs increase, the cost to underwrite a mortgage increases as well. From energy costs to staffing, the cost of underwriting is not deflating, and thus the threshold for affordability will rise in conjunction with, or even faster than, reported inflation rates.

Finally, from an experienced investor perspective, it is important to find communities with stabilizing housing and homeownership; this is a key factor, especially in many urban pioneer neighborhoods. Buying (and selling) real estate in these communities is often closely connected to the increasing percentage of homeownership. This increasing homeownership is itself a key reason many CDBG funds are spent by municipalities to develop that initial momentum in a neighborhood long suffering from blight. Imagine the changes that could be made with the free market capital of homeownership unleashed in these areas!

To help, please reach out through National REIA’s Action Center to encourage your congressperson to become a co-sponsor. Visit www.NationalREIA.org and click on the Advocacy tab.

Additional updates & resources can also be found at our partner’s site, www.SellerFinanceCoalition.org.