Buying investment real estate in Arizona is a great addition to any portfolio. As a much safer bet than the stock market, real estate can provide a nice, steady flow of income and can also be used as leverage, creating more buying power. Working with a partner allows you to pool resources and make larger investments with larger returns. In this post, we look at what steps you can take to Find a Great Partner When Buying Investment Real Estate.
Why Work With a Partner?
Beginners in buying investment real estate would be wise to find an investment partner who has a lot of experience and is very knowledgeable about the Arizona market. This way, you can optimize profits while potentially minimizing and/or sharing costs. You can bring suggestions to the table and have a partner to confer with, ultimately selecting stable and profitable investments that fit your ideal portfolio. Even if you have years of experience, it might be a good idea to partner with someone familiar in a different facet of investment real estate than you so you can expand your portfolio. One more upside to working with a partner—simply to have more money to invest for larger gains.
How to Find an Investment Partner
We can help you find groups in Arizona where you can meet other real estate investors who may be interested in partnerships. When you meet someone you get along with, ask if they would like to get a cup of coffee to discuss a potential partnership. You want to make sure your new partner is reliable and trustworthy, so don’t be afraid to ask them a few questions.
Some great questions to ask a potential partner include:
- How many investment groups are you currently involved in?
- How many investments are you planning to make this year?
- What is your potential investment amount if you partner with me?
- What investments have you made so far and what are their returns?
- How involved in the investment process are you planning to be?
- Who else have you partnered with that I can talk to?
You want to make sure you can see yourself working well with this person, so take your time getting to know them.
Make it Legal
Protect yourself and your partner or partners when buying investment real estate. Form a legal entity and create an operating agreement. This will identify the ownership percentages of each partner and how much money each person has contributed to starting the partnership. You can also define the allocation of profit and costs of the investment real estate.
Most importantly, the agreement will outline the roles and responsibilities of each partner. Make sure to define an acquisition and asset management process and hold each partner accountable for each assigned part of the process. Brainstorm all of the steps with your partner—finding investment real estate, making offers, the closing process and fees associated, how to manage rentals, what is the division of profit and when does this occur, maintenance fees, annual taxes, attorney fees, and much more. Figuring all of this out at the beginning is important for a smooth partnership!
Now that you’ve found your new partner or partners and created an entity with extremely specific roles and responsibilities, it’s time to start buying investment real estate in Arizona!