Real Estate Partnerships

5 Secrets on Finding Money to Buy Rentals

April 15, 2020October 30, 2018 by Gary Spencer-Smith

5 Secrets to Find Money to Buy Rentals

Raising Money

Have you ever wanted to invest in real estate but you don’t have the funds to start? We are here to tell you its no excuse! There are many ways to get started in real estate without using your own money.

#1 – Use the equity in your own home.

If you’ve owned your home for a while and you’ve paid down your mortgage and perhaps the house price went up a little bit, you might have some equity sitting there. Use what you’ve got to get what you want. You already have it, so why not put that to use? Otherwise the equity is sitting there doing nothing for you. It might giving you peace of mind, but it’s not helping generate anything for your life. So use what you’ve got to get what you want.

#2 – Do you have RRSPs?

There are two ways of using RRSPs if you have your own. You can lend it out as a mortgage through a soft direct account. And the other one is if you’re an investor, you can use other people’s RRSPs. Now there are a few rules behind this. They can’t be a parent or sibling. There’s various rules and we’ve got a video that explains about RRSP mortgages on our YouTube Channel, but you can also use other people’s RRSPs and you can have that as a first or a second mortgage on your property. Typically we will do 8 to 10% on a RRSP for someone and that’s secured against an asset. This makes sure people are happy when they’re doing it and they’re happy to lend it. We usually do that for shorter term lender, not for long term lenders, but that’s what we use RRSPs for.

#3- Private Money.

This is sometimes called hard lending, but basically that’s somebody that has cash and they’re willing to lend it to you for a guaranteed rate of return. This can be high. I’ve done 50 to 60% of the deals that and we’re finding people that have money but they don’t necessarily have the time to put into a real estate deal. So we’ll use their money, we’ll put it in our time, and then together we will create a joint venture, then give them a return on their money. It’s secured against a solid asset. It’s in real estate. Most educated people don’t want to just put it in the bank, they don’t want to put it into a mutual fund. When the market crashed in 2007 2008 people saw the money just disappear. An example of who people may want to take it out and put it in a solid asset.

#4 – Be a Joint venture Partner.

If you might not be able to qualify for a mortgage, then we shall find my “friend Bob.” Thankfully, Bob has great credit and his ability to borrow to get the mortgage is possible. Now you and your “friend Bob” with create a joint venture agreement for a real estate deal! There are many ways of getting into a joint venture. A joint venture is you and at least one other person are going into a venture together to partner up to go purchase some real estate and it’s gotta be a win-win.

You want to make sure everybody’s happy and you want to make sure that everybody has different benefits that they’re bringing to the deal. Someone might be bringing the experience, someone might be bringing the money, someone else might be bringing the ability to borrow from a lender, are a few to name. If someone has money for example, which you may hear the terms; a private money lender or a hard money lender would be one person in the deal. Someone with no money may borrow this persons money because they’re self employed or cannot qualify. Its kind of like fitting the pieces into the puzzle or the different people into the same deal. Usually if your the one borrowing the money your skill will have to be putting in your knowledge and managing of the project. If you need investor training go to Rev N You School and see our real estate investing courses.

#5- Presenting a Good Deal.

And the final way, and this is probably one of the most important. One of my mentors said this to me very early on, they said, “Gary, if you find the right property and the right deal, the money will come to you.” Now I didn’t really understand what that meant. And then as I got further into the process of looking at properties, looking for deals, I then realized that you can’t say the wrong thing to the right person if your deal makes sense on paper and is simply a good deal! So what I mean by that is it, if you came up to me now and you were showing me the numbers on a piece of paper of this deal, and it’s a great investment. There’s lots of people I know, friends of mine, people in my narrow, they’ve all got great deals and when they show me on paper, I’m like, I would find the money for that.

For example, if I had a Porsche that was worth $150,000 you know it’s a really good one. And I said, Hey, you can have this push for $10,000 you might not have $10,000 in your pocket, but you’d find $10,000 pretty fast because you know that is worth $150,000. It didn’t matter if I was giving you the wrong information about the statistics of the brakes. It doesn’t matter how good the deal is, if it’s not the right person to invest and then not the right mindset, you could talk to them for three days. They will never invest. But if you have the right house and the right property, then the money will find you.

Finding Money Resources

BONUS TIP: Go to local real estate meetings and start to network and meet people! People are constantly connecting and finding joint venture partners by taking the extra time to go to events. It’s beneficial if you have a great deals ready to show people or talk about then follow up with them with more information.

Watch this video before you head to your next meeting.

How to Create the Perfect Script for Raising Money

April 15, 2020January 15, 2014 by Julie Broad

How to Create the Perfect Script for Raising Money

Joint Venture Partners

I want to help you raise money for your real estate deals. And to do that, I’m going to give you the five questions that you need to answer in order to have an investor give you their cold, hard earned cash. So those five questions, get that pen and paper out.

#1 – Why me?

#2- Why now?

#3- Why this market?

#4 – Why this deal?

#5 – Why this strategy?

Now, there’s some key elements under each of those questions that you need to answer and you’ll also need to know that I’m not encouraging you to memorize a script to answer each of those five questions because the other person you’re talking to doesn’t have the same script. So if they don’t ask you the questions they’re supposed to ask you or follow the format that you’ve practiced to follow, then you’re going to be all messed up.

I recommend you get comfortable with the key points that you want to cover and know that those generally are the five key areas that you’re going to have to discuss. Somebody has a comfort level in what you’re doing. Now the key point and the point that a lot of people mess up is they memorize bullet points of facts and then they regurgitate them and… it’s not horrible, but it’s not a very engaging or a very influential way to communicate. Let me give you an example from a client that I was working with. Although I’m going to make up neighborhoods for the sake of protecting the hard research that she’s spent most of the year doing in the city of Toronto. She got on the phone with me to practice this cause that’s one thing we spend a lot of time helping our coaching clients do is refine their five why’s. If you want one on one coaching involving joint venture partners go to our coaching page. We would love to help you out.

She was working on these elements and one of the things was why this area, why this market? She picked the Albert area and how she’s picked Albert area after a year. She went on to tell me there’s 450,000 people working in downtown Toronto and they have high paying jobs in the financial industry, healthcare professionals and professional services. And those are good tenants because they have high paying jobs. This area is also mostly houses where as a lot of areas in Toronto are now totally condos. And she also said that it’s a 12 minute subway ride to downtown, so it’s really easy commute for people.It was a good family neighborhood. She gave me these facts and it sounds good, right?

Oh, I forgot one of the key elements, the price of houses in that area. It was still possible to find houses for under $500,000 and the layouts of them were conducive to adding a second and sometimes even a third suite so you could turn a single family family home into a duplex or triplex. So those were the facts and it’s good information but it’s not that engaging or interesting. So I made a little change and I basically said, okay, it’s good information. So now here’s how you want to tell somebody. You know what? I have spent all year finding the perfect area for investment. And for part of the year I was really excited about Lulu town and Francesca Ville because those two areas had the house layouts, they’re close to schools, they had good transportation. And I really thought that I’d be able to attract good quality tenants to those areas. But I wasn’t satisfied with the price of homes. I didn’t feel like there was enough opportunity there with the price of home that I wanted to buy and to be able to add suites. So I kept digging and I dug and I put hours and I’ve spent my Saturdays going into these areas and I finally found “Albert area.”

Albert area is perfect. I’m so excited about the area. I can find houses for under $500,000 I can put a little bit of money into it, $85,000 – $100,000 to turn it into a duplex or triplex and that house now has the potential to be worth $700,000 but I won’t go too far into the numbers I want to tell you about this area and why it’s so cool because it’s a 12 minute subway ride to downtown. There’s people commuting an hour or two hours into downtown Toronto for work and these folks, they can live in a house, not a condo, which is what a lot of people want, a lot of professionals want and they only have a 12 minute commute. The areas, the sub pockets of Toronto always get discovered. So I’m certain there isn’t that much time to act on this area because it won’t be too long before people realize that there’s still houses for under $500,000 that we can make a lot of money on.

She still has more information to convey, but she’s going to stop, right? You’re not going to do your whole spiel. She’s going to stop there and see if they have questions, comments, and then she’ll engage a little bit more. Maybe ask them if they’re familiar with the area and go from there. So it is a conversation you don’t want to get too enthusiastic and get too carried away and talk too much, but you also really want to turn it into a bit of a story. So I tried to turn it into a story of how she found the area, and I haven’t even gotten into the fact that she has a killer team that knows this area, that has insider access to city of Toronto information and a few other key details, which she would then work the rest of the conversation.

It’s a big subject and something I love working on. I love taking the facts that people have and helping them create an influential and story with impact that will help others raise money too. But for now, start thinking about your answers to those five why’s so that you can start crafting your own stories and creating your own conversations to raise money for your real estate deals.

Joint Venture Resources

One on one Coaching with the Rev N You Team

What is the Right Split for a Real Estate Joint Venture?

April 15, 2020September 1, 2013 by Julie Broad

What is the Right Split for a Real Estate Joint Venture?

Joint Venture Partners

Today I got a question coming in from one of my followers. They asked what’s the right split when you’re looking to someone to do a joint venture and they’re putting in all of the investment capital. My answer is that there is no right split. There are many ways to do a joint venture. It’s one of the reasons why we love raising money, not just joint ventures but private money, vendor take-backs, RRSP mortgages. The world of real estate is pretty phenomenal when you understand how to get the investment capital you need to do the deals you want to do. Specific to joint ventures, how we do it is we look to our partner to put in the initial investment capital, usually somewhere between 65 and $80,000 for the houses that we did in 2013. NOW it will be higher then that around $250,000 plus in 2020!

Then we have a reserve fund in place, which is usually two or three months of expenses. And we buy the property as we own it, they put in the initial investment capital. We own it 50 50 because my husband, Dave and I are doing all the work. We find it, we negotiate it. We’ve been working in the area for, well we’ve been buying in our main investment market for 12 years now. So we have area expertise in the team. We oversee it, we make sure it’s making as much money as possible every month for the life of our holdings. So that’s what we do in exchange for our 50% going forward if any money is required. So sometimes a tenant moves out and you think it’s time for an upgrade. Sometimes something goes wrong.

You might have to put a few thousand dollars in. When that happens, we split that 50 50 so 50% of whatever the expenses comes out of our pocket and 50% comes out of our partner’s pocket. When we sell, our partner gets their initial investment capital out first. Whatever’s left over, hopefully there’s lots leftover, either way it is split 50 – 50. Cash-flow that comes in is split 50 – 50, or goes to build up a further reserve fund depending on what’s going on in the property. So that’s how we do it. However, you can do it in all kinds of ways. We have joint ventures where our partner owns 25% and we own 75%. They didn’t put much money in, they just qualified for financing. We have partnerships where our partners own 60% and we own 40% or vice versa. Today we don’t deviate from our model, but in the past we weren’t as sophisticated.

We would work with whatever came our way and try to come up with a deal that everybody was happy with. So there isn’t a right way to structure it. And if you’re brand new, this is one of your first deals or your first joint venture deal and you’re trying to build a track record, you may want to give up more. You may want to put in some money, whereas in the future you might not want to or you may want to give up a higher percentage just to make it appealing to somebody to work with you when you don’t have an established track record. The only caveat I’ll put on that, or a word of caution is that you can pretty much expect they’re always gonna want that deal going forward. Even if you clearly communicate that this is a one time thing, I’m just doing it to build my track record.

It’s what you’re going to be happy with, what you’re comfortable with and what works for the resources you’re bringing to the table versus the resources that your partner is bringing to the table. It’s kind of a complicated subject, but hopefully that all makes sense and helps you a little bit. If not, we will be happy to get back to answer your questions.

Joint Venture Resources

Rev N You with Real Estate Watch on YouTube

How to Find Your Ideal Joint Venture Partner or Lender

April 15, 2020April 24, 2013 by Julie Broad

How to Find Your Ideal Joint Venture Partner or Lender

Joint Venture Partners

One of the things I talk about all the time when I’m on stage giving talks about raising money, in our workshops or our live training about raising money for deals is; What you need to focus on when finding your ideal investor. I do this for two reasons. One is because it takes the focus off finding the money and kind of puts the power back in your shoes, right? Cause you’re no longer looking for money, you’re looking for somebody that is a great fit. And of course it’s critical to find somebody who is a great fit because if you don’t, it’ll be a pain in your butt. It’s very important to do that and it’s something a lot of people don’t do!

Many people think, I need somebody with money and then they can give me the money for the deal so I can buy more property. But there is more to it, you want to find somebody who’s a great fit and everything gets easier if you do that. But how do you know what is a great fit? It can be really hard to think about that and figure it out.

So here’s what you do.

Take out a piece of paper,
draw a line down the middle.
One side will be for what you DO want.
The other side will be what you DON’T.

All you’re going to do is make a list of everything do and don’t want an investment partner. So when we did this, we thought, okay, well we don’t want somebody who’s active. We want to be the only cook in the kitchen. So dinner turns out perfectly. We don’t want somebody who is an active investor. We don’t want somebody who asks us a billion questions. We don’t want somebody who only has a small amount of money. We don’t want somebody who wants their money out quickly.

Those are kind of things we started to write. And by doing that, we’re able to very clearly see who we do want. For example, we want somebody who’s hands off, they don’t want to be involved in the day to day decisions. They’re going to rely on us in our expertise and experience. To do that, we want somebody who has the financial capability of doing multiple deals. We don’t want this to be their last $50,000. We want somebody who can afford to do multiple deals. We want somebody who will ask some good questions to make sure their investment is secure, but they’re going to trust us and rely on us to make the decisions. They’re not going to challenge every little thing like, why did you buy that dishwasher?

So once you go through and you figure out what you don’t want, you can clearly figure out what you do want. Once you know what you do want, you’re able to sit across from somebody and ask really high quality questions to figure out if they’re a fit for you to work together. You can ask them, have you ever invested in real estate? Do you currently? Why or why not? Right? Find out if they’re active investor, what are you looking for in an in an investment, right? Do they want to be hands on? Do they want to be involved? Those are some of the questions that you can now ask because you know what you’re looking for, so hopefully that helps you raise money for your deals.

Finding Your Ideal JV Partner Resources

Go to local real estate events and start talking to people, build relationships and get to know them. A lot of people jump into a real estate deal with not much knowledge about a personal behaviors.

Watch more videos on Rev N You’s YouTube Channel.

One Powerful Tip for Raising Capital In Real Estate Deals

April 14, 2020September 30, 2011 by Julie Broad

Raising Capital Tip

Hey there, it’s Julie broad with Rev N You coming at you with a real estate investing video tip. And this one’s quick, but I’m going to make a very big, big point when it comes to raising money for your deals. Here’s how a guy approached me recently and he was like, I found this deal and it’s a duplex and it needs a bit of work, but I think we can get it for X price. I want to figure out why I’m not able to raise money because I need to get these deals done and I’m finding good deals. I don’t know exactly what he said to me, but my point is this might’ve been the best deal on Vancouver Island, which is where I live and invest. It might’ve been the best deal, but no one is going to work with this guy on this deal.

And it had nothing to do with the fact that he was a little nervous. It had everything to do with the fact that this guy had no energy. He was like, uh, you know, if I talked to you like that on this video, you would’ve clicked away like 45 seconds ago. So if you’re out there in public, and I hope you are talking to people, generate some energy, slap on a smile, show some enthusiasm. If you want to be in the real estate business, you’re going to have to show that you like it. And if you don’t like it, why are you in it? Because it’s going to be a rough ride. There’s times when you won’t like it, even if you love it. So get out there and meet people. I highly encourage you to do that, especially if you’re raising funds for your deals, but you’re going to have to have energy and enthusiasm for what you do. But you know, why did he do that? If you make that effort to smile, to be enthusiastic, to be positive, you’re going to find that it’s quite a bit easier to raise money for your deals. And you might even find a few cool opportunities that find their way to you. And you weren’t even trying. So smile, be energetic and have fun.

Raising Capital Resources

Watch more videos about raising capital on Rev N You’s Raising Money Playlist.

Raising Capital Section in the Course Real Estate Achievement Program.

5 Secrets to Successful Real Estate Partnerships

March 6, 2020March 3, 2009 by Julie Broad

“One good thing about being young is that you are not experienced enough to know you cannot possibly do the things you are doing.” – Gene Brown

The smartest thing my husband and I did to build our multimillion dollar real estate portfolio in under eight years was to find a couple of great partners.

As I reflect back on the things that my husband and I did in the last eight years to become millionaires – I think that finding good properties in areas with promising economic futures, and buying them with good partners was the key to our success.

Partners can bring cash to the table if you don’t have enough, they share the risk on a venture and can also provide mentoring or advice. A good partner, in our experience, brings something to the deal that you don’t have. If you and your partner have experience but no money, you will be stuck. If you both have money but no idea what you’re doing, it will be messy. But if one partner has experience and the other has money, it’s a foundation for a solid partnership.

It’s not a guaranteed great match just because you have the expertise and they have the money! There are some other things to consider before you partner with someone on a real estate investment.

Here’s what we’ve learned are the secrets to successful real estate investing partnerships:

1. Common Objectives

Some people have the expectation that buying investment property is their ticket to overnight wealth. Or they think that just a couple of deals will give them enough cashflow to retire on, but the techniques that can create giant amounts of cash flow or that are more instant in their wealth creation are extremely high risk gambles that pay off for only a few. For many others they can lead to a lot of problems, including bankruptcy in extreme cases.

Before we decide to partner with anyone, we make sure that they have similar fundamental objectives for their real estate investing as we do. When we buy real estate, we buy properties that will have positive cash flow within 12 months of purchasing it, and that we plan to hold it for a minimum of 5 years, but more realistically, 10 – 15 years.

As long as our partner has a similar mindset, and is comfortable investing their money for the long term, then we can continue discussing our partnership.

2. Begin with the End in Mind

It’s a throw back to Stephen Covey’s Seven Habits of Highly Effective People, where he says“Begin with the End in Mind”.It’s important to discuss with your partners how either one of you can get out of the deal in the future if it’s critical. For example, if you buy a duplex and each have 50% ownership, but down the road, your partner comes on hard times and needs the equity from the property. You have three options:

1. Sell the property
2. Buy your partner out
3. Find another partner to buy out your partner.

You could also do nothing, or give your partner a loan against their share in the property, but realistically you’d probably consider one of the three options.

What you need to discuss and have written into a partnership agreement is how you will value the property if you choose to buy your partner out or find another partner to buy out your partner. You should also note that any new partner must be 100% satisfactory to you. In other words, your current partner should not go out and find a new partner for you and sell their share without consulting you.

3. Be Fair

It’s not always easy coming up with $20,000, $30,000 or more for a down payment on a property. And, although we are millionaires on paper, that doesn’t mean we always have chunks of cash lying around ready for the next super property deal. But because we have a few partners that almost always have money sitting around, and because they’ve made great money with us in the past and they trust us to make good decisions, they are always willing to consider new deals from us. And, they selectively tell their friends. Because, what you’ll find, is that people with money, often have friends with money. Over time, you can find yourself with a really solid group of people willing to provide the down payment for future deals.

Just because someone is waving a stack of $100 bills in your face, doesn’t mean you should throw them on the first deal that comes your way.The secret to long term and high quality partnerships is to spend your partners money even more frugally than you would spend your own. This means you NEVER put someone else’s money into a deal you wouldn’t put your own money into. You NEVER take a cut that is unreasonable for the amount of work you’re doing relative to the amount of money they are putting in, and you NEVER make major decisions without consulting your partners.

4. Under-promise and Over-deliver

Not too long ago, our main partner introduced us to a friend of his. As the two friends were discussing their businesses and their investments, our partner realized that this person would make a great addition to our team. When we met for coffee my husband and I communicated our failures in investing as well as our successes. And we clearly told him that we aim for neutral cashflow properties that we hold for the long term.

What we told him is not totally true though. We aim for positive cash flow. But, we always try to undersell ourselves and then over deliver. We’d do the same on a specific deal. We’d tell him that we expect it to break even, but really we’re expecting it to be postive.

If you tell someone that a property is going to bring in $500/month in positive cash flow, and then it only brings in $380 each month, they will be disappointed. But if you tell them that the property will be neutral cash flow, and then it brings in $380 they will be thrilled.

We’d rather undersell someone and have them decide not to invest with us than over sell, have them invest with us, be disappointed, and be an unhappy partner.

5. Communicate Regularly

We partner with people that don’t expect us to give them a glossy annual report each year. They don’t expect a weekly progress report. We do, however, always give them updates and advance notice of money coming in and going out. And, we keep them up to date on the property. If a tenant moves out, we let them know. When the unit is filled again, we let them know. If we foresee a major expense coming, we give them a heads up. If we just learned of some recent sales in the area that indicate our property has gone up in value we let them know. If there is bad news in the market, we will reassure them about their investments. But, we do this informally. A quick phone call or an email when there is something to tell them.

And, if they call or email us, we get back to them right away. If you have money in the bank and you want to check on it, but nobody is answering your calls and you can’t get online to see how your money is doing, you will lose confidence in that bank. The same will happen to your partner if they can’t talk to you when they need you.

We found that because we take care in choosing our partners, and ensure we are all “singing from the same song sheet”, we rarely get calls from our partners. And, we also find that our circle of trusted partners is growing without us trying. And thank goodness, because now that I am retired from my job, and my husband is close to doing the same, we’ll have more time to find great deals, but less cash coming in to pay for them!