The Good Stewards Real Estate Podcast

A Guide To Partnerships

Episode Summary

There are really three rules to partnerships. 1. You need to have different skillsets. 2. You need to set a purpose or goal for what you and your partner are trying to accomplish in a specified period of time. 3. You need to be open and honest in your communication with each other.

Episode Notes

Outlining Your Path to a Partnership:

4:15: If you’re new, don’t just find any business partner because you don’t want to fail alone.

6:00: Varying skillsets are critical. You should be able to do more by partnering with your skills together.

8:00: There is such a thing as a passive partnership. Such as a lending partner. Or you find the deal and your partner does the work.

10:00: You need to be willing to have the difficult conversations upfront so that you are figuring out how you both communicate in the early stages. Once things get moving, adding money and emotion, you’ve got to be able to communicate well and figure things out.

13:05: Specify what expectations are in the partnership. If you don’t have it in writing it doesn’t help you. Determine who does what in what situation or scenario. 

18:20: Stephen Covey has the term “win-win or no deal” essentially saying that if you both can’t find ways to win in the partnership, then you should call it quits.

19:40: Strengthfinders is a great way to determine how people are and highlights what you’re uniquely gifted at. Your strengths are set pretty early on in life.

22:25: Start with a legal document. It’s important.

Unwinding a Buy and Hold Partnership:

26:40: In our out of state partnerships, we bring the lenders and infrastructure, but it’s our partner’s job to manage the day to day and oversee the rental side of the business. If your partner (in this case) isn’t going out and showing properties, collecting rents, etc. It’s time to dissolve it due to unmet expectations. You have to look out for you and your lenders.

30:57: Never, unless someone is unethical or dishonest, burn bridges because Bill has been surprised multiple times in the last 30 years with how things in life come back around.

31:40: Where we really went wrong in the midwest with some partnerships is being under the illusion that this person would be able to learn the other sides of the rental business aside from acquisitions. As an out-of-state partner, we can’t build the business for you, nor would it be fair for Stewardship to, given the agreement.

34:00: One other characteristic I’ve got to have when I’m looking for a partner, they’ve got to be willing to learn and be business-minded.

Finding A Partner:

35:16: Get out there and network. Go to investment groups like a REIA and find people likeminded with similar goals. Also be on the lookout for A-Players in your organization, they’re going to eventually want a piece of the action.

Books Mentioned:

18:13: Seven Habit’s of Highly Effective People by Stephen Covey.

23:26: Built to Last by Jim Collins.

Connect with the Good Stewards:

Episode Transcription

Amanda: The partnership, have those difficult conversations with who you're going into partnership with so that you guys can figure out how you do communicate. Because if you can't agree to figure out, well, you know, like how things are going to be. Uh, possibly at their worst. When you're at your best, they're probably not going to work out as a partnership for you.

[00:00:25] Intro: Welcome to the good steward podcast, the only podcast dedicated to seasoned real estate investors who want to maximize the cashflow potential in their business. We are buy and hold investors with a thousand plus properties in markets across the U S who bring an insider's view into the nitty gritty details of real estate investing. If you're looking to develop the mindset teams and systems that can dramatically build your real estate business and net worth, you're in the right place.

[00:00:57] Ryan: Welcome to this episode of the good stewards podcast. I'm Ryan Dossey.

[00:01:01] Amanda: I'm Amanda Perkins

[00:01:02] Bill: I'm Bill Syrios.

[00:01:03]Andrew: And I'm Andrew Syrios.

[00:01:05] Bill: Welcome. We're glad you joined us today. We have a really good podcast, I think for you. And we're going to take a deep dive into all things partnership ish. So if you've ever been in a partnership, if you've contemplated a partnership, if you've thought, Hmm, I have had my fill of partnerships, no matter where you're at, we're going to get into it.

[00:01:28] So. I actually got introduced to partnerships very early on when I was a real estate investor. And by the way, I should be remissed to say, if you haven't been with us before, please check us out at thegoodstewards.com and we have a free book for you to grab there as well. But in terms of partnerships, I, uh, was introduced to a couple of people who were fairly, one was a temporary partner and one has been a partner virtually for life. His name is Greg Whiteley, and we partnered initially on one multifamily project that a real estate agent brought us together on. It's been a great, not just partnership, but a friendship that has grown out of that. Uh, the other person was more temporary, just a few deals for a few years.

[00:02:15] Um, but it introduced me early on to the value of partnerships and also the pitfalls of partnerships. And there's certainly both. I mean, partnership is like getting married, you know, you, uh. Uh, I don't know what the divorce rate is. I don't even want to look it up, but it's fairly high. And the divorce rate in partnerships is also fairly high. Now It's not always ending because of, somebody stoled something or there was a great mistrust or something. Sometimes they just end because people turn different directions, but you need to be ready from the very beginning when you're contemplating partnerships about how it might end and be ready for that at the very beginning.  Some don't. But many, many do. Uh, my partnership with my wife has lasted 43 plus years now, and I expect it will continue to last. But, uh, partnerships are very much like that, that getting married thing because you're joining with another person in a business relationship that has deep implications for how your business will go.

[00:03:18] So, uh, that's just to kick it off with, uh. The question is what, where do you start with it? Uh, anybody want to jump in at this point in terms of their,

[00:03:29] Ryan: I'll, hop in with the what not to do so. I don't know what it is about new investors, but, um, we see a lot of brand new wholesalers, flippers, buy and hold guys that like, partner up real quick. And, uh, I, I would compare this to like, you know, getting married at 18, right? Like, it's, it's typically two people. Um. I like to think of them as two drowning people going down a river that neither of them know how to swim, but they think if they hold together, they'll float. Right. And that's just, that's typically not how it works.

[00:04:04] Um, I kind of have just like three, uh, three quick rules. Um, first one, it has to be mutually beneficial. The, the partners have to be bringing different things, um, to the partnership. Two, there has to be, um. There has to be like a purpose or like a goal behind it, right? And it can't just be like, you know, we're going to stack checks. There has to be like, you know, Hey, we're going to do our first five deals together, or we're going to buy five properties together. The other thing I like is to see like a reassessment of, um, you know, Hey, we're going to do this until this timeframe or until this goal is made. Um, you know, I think the, like a marriage piece of you have to have that level of like honesty and communication of you've got to be able to be like, Hey, I'm not feeling heard when you're talking to another dude. Right? Like, it's, it's something you've got to kind of check your ego at the door with. But I would just caution anybody new who's listening to this on just like going out and finding a business partner because you don't want to fail alone. Um, and I think that's ultimately what it comes down to often is like, it's okay if it's not just me, but if it's all me and it fails, then I'm the one who failed. Um, so the only reason I preface that we're going to talk about a lot of good things with partnerships and some not so great things, but. Um, I didn't want this to be like a partnership pitch for anybody new that's listening.

[00:05:31] Bill: When I think of partnerships  Ryan, I think of, uh, the word synergistic and, uh, synergy means that one plus one equals more than two. It equals three,

[00:05:42] Ryan: not one plus one equals a half.

[00:05:44] Bill: That's a drowning partnership. Yeah. A partnership where you're bringing in different people. Think about Steve Jobs and Steve Wozniak. You know, you've got the visionary and you've got the operators. Matter of fact, Amanda and I were talking about this a couple of days ago, that you, you need a different skill sets essentially to build a business and having a skillset plus ownership of the business makes for a powerful potential, a connection with each other. And, uh, you, you need, uh, in that case, they needed a visionary and they needed a, an operator. And the two Steves uh, you know, initially build a very powerful business that, um, became what we know of Apple today. But many partnerships started that way where people came together because they saw the potential of them joining was actually more than the sum of their parts. The whole was greater than the sum of their parts, and I would think any partnership you get into, that's an evaluation you need to make. Am I going to, uh, enjoining with this person or these people?

[00:06:51] Is what we're creating better than what I could do? We could do individually.

[00:06:55] Ryan: Do on your own. No, I totally agree.

[00:06:57] Andrew: I think you should look at what kind of partnership are you creating too. I mean, with regards to, uh, you know, are they, uh, are you, are you adding something more than just, uh, than just time and energy? Like, is there, you know, if you're having a partnership where, let's say. Some partnerships are just simply passive. Like if somebody is putting, we have our, we talked about this before, the big purchase of 97 properties here in Kansas city. We brought on partners that helped with the equity side of that purchase in a, and. Now it's a tenancy in common, but there are others like syndications for apartment complex where they're simply bringing money to the table. And the syndications are securities, that's another topic. But where there are partnerships where it's, they have an active partner and a passive partner, and there's no, the passive partners basically just collecting checks from your work. They're putting in the money or most of the money you're putting in less.

[00:07:55] There are partnerships where it's evenly split. Both people are doing everything. There are partnerships where. Both people are doing very different things. Kind of like your very first one dad where you did, you found the properties and and your partner did the rehabs. Or there's partnerships where someone puts in most of the money and some of the work and the other person puts in a little bit of the money. So it's important to, to see what exactly you're looking for in that partnership and design the partnership accordingly. Um, because yeah, there is those partnerships, for example, on that 97 properties. Is solely on that portfolio. Uh, you could have a passive partner that's for your entire company just funding it or on a property by property basis with no groups of passive investors and things along those lines.

[00:08:37] Bill: Yeah. What's always tricky is to know the end. You know, w when you start at the beginning, there's oftentimes a lot of enthusiasm and momentum.

[00:08:46] Amanda: The honeymoon phase, we'll call it.

[00:08:49] Bill: At that honeymoon phase, but then things change that not necessarily the partner becomes dishonest. Uh, but. Their situation in life might change. You know, a, all of a sudden they get married and they have other priorities, or they, uh, they get to a certain point financially and they, they want to do other things. So life changes and that's, that's a constant that things will change. So

[00:09:13] Ryan: I think that's one of the parallels we make with a marriage of, you know, if it's a mutually beneficial relationship and you can change and grow together. That's ideal. Uh, what, what doesn't work when it's like, well, I want you to be who you, who you were before. I mean, uh, my wife and I joke about this all the time in our, in our marriage, but, um, when we got married, she wanted to be a journalist and I wanted to be a cop. She's now a military psychologist and I'm a real estate investor with a couple other companies. Um, we've changed a lot as people, but I think it's important. If you're in a partnership that Hey, we, this needs to be a longterm thing, that you're able to grow together and kind of have space for that.

[00:09:55] Amanda: Well, and you know, brings up, um, you know, ironing out kind of the details as you go along, up front. Because sometimes those are really difficult conversations to navigate yourself through. Um, I would say kind of like a prenup, except for not the same, because most people go into marriage thinking, hoping it's forever. But, you know, prenup can be smart, but with a partnership, have those difficult conversations with who you're going into partnership with so that you guys can figure out how you do communicate. Because if you can't agree to figure out  how things are going to be, possibly at their worst when you're at your best, they're probably not going to work out as a partnership for you.

[00:10:38] Ryan: Add money and emotions and see how it goes.

[00:10:40] Bill: It's the what ifs that you need to fine tune. And, uh, bringing the lawyer into this is not a bad idea at all. Somebody who has more experience, uh, has been around, uh, you know, around the. The landscape and seeing a lot of disasters happen and seen a lot of successes happen as well.  talking to other, other partners that are really getting some a feel for what this could be and could not be going into it because a, not only do people change, but circumstances change. And sometimes, you know, interesting. Greg and I, for instance, have been through some pretty stressful experiences together. And I'm here to say that he. Does well under stress, and not all partners do well under stress, but very likely your partnership will come under stress at some point, and you don't even know how they're going to react under stress. Financial distress is what I'm talking about in particular. So you know, you just can't anticipate, uh, how things are going to go and you need to. Anticipate how they might go up front and, and the, you know, protect yourself as much as possible in the initial stages of setting out the expectations of the partnership.

[00:11:55] Amanda: And really, uh, it's a, it's, it's a relationship. So if somebody tells you something about themselves, you know, I can think of a, for instance, um, we have somebody who he told us many times, I am not a good partner. Not to good partner, and he's not a good partner for him. He is a good partner in some ways, but, um, he's not a good partner just because, you know, like there isn't a lot of, um compromise that happens in his head initially. But you know, we moved forward and it worked out. You know, it works out, but you have to realize, like sometimes when people tell you stuff, you need to listen to what they're saying. So you know, some people aren't good partners and if they tell you we're not good partners, but we think, Oh, we're going to try this anyway. Listen, listen to those nagging red flags along the way. You know, this is a time for you guys to really figure things out before you dive in and are in the middle of trying to figure out your business transaction and then you're realizing like relationally things are different, things are difficult.

[00:13:00] Ryan: Yeah. I think one of the, one of the key things is just, um, setting proper expectations. Um, Bill's got the quote of, um, you know, expectations that aren't discussed or what premeditated resentments. And you know, making sure that, you know, I expect you to do X and that, that, that is communicated in writing. I think a lot of new people make the mistake of like, well, yeah, we downloaded an operating agreement off of legal zoom and we're good to go. It's like, okay, but who does what and what in what situation, what scenario? We're going to talk about a partnership or two that are wrapping up. And the big thing was like. There were expectations that were communicated clearly in writing that just were not getting done. And, uh, you know, it's having those out in the open before you stack on money and assets, and I mean the last thing you want. It's kind of like, it's unfortunate to use this, but we're talking about ending a partnership. It's kind of like a divorce, right? There's divorces where it's like, Hey, we just weren't a good fit anymore. You go your way, I'll go mine. And there's divorces that it's like, I'm going to make your life a living hell. So it's, you know, uh, having it in writing can make it the, the former and not the latter should it go that way.

[00:14:16] Bill: You've touched on this before, but, uh, Ryan. The keys, I think to partnerships one is honesty and integrity upfront because you are in our enter into a relationship that is just not you anymore. There are other people with their own future, their own goals, their own ambitions in mind, and you've got to be upfront every step of the way and straightforward with each other. That is just key to the glue of holding a partnership together, I think over a long period of time.

[00:14:44] Ryan: Well, I'll say as a stewardship partner. I made the mistake early on of like I wasn't communicating things that I needed or things that I was necessarily doing or costs that I was carrying that I shouldn't have been carrying. And I think that is one, one thing that I look at as somebody who's, uh, who is a partner of, huge Testament to working with you guys in general, is just that like i, I think you've got to make sure the other person always feels like you have their best interests at heart, not just your own. Uh, if you're selfish, a partnership is probably not for you.

[00:15:21] Andrew: Unless you find a real doormat, I mean, then maybe. You can mooch off them good, why not?

[00:15:31] Ryan: Bleed them dry and then discard them when you're done.

[00:15:33] Bill: Doormat LLC.

[00:15:36] After the key thing of honesty and integrity, I think is working hard. Just being committed to hold up your end and work your tail off is really important. If one person is slacking and the other person knows that, that's just just just a killer. It's just such a motivation sapper if you think, you know, I'm really putting in all the work here, I had to end one partnership because I felt like that was true. Ultimately. This person was finding a lot of excuses for free time and kind of treading water and, uh, it just wasn't a good experience. I had just, you know, fortunately it was fairly amicable ending to it, but he just didn't keep up his end of the bargain. And I think once somebody starts flagging in their zeal that that needs to become a topic of conversation and ongoing communication and straightforwardness is again, the key to a longterm healthy partnership.

[00:16:32] Amanda: Well, and you have to be able to communicate with your partner because, um, if you're talking to everybody else and not your partner about the problem you're having, your partner isn't hearing any of that.

[00:16:40] And so, um, you know, it's kind of the same thing back to the marriage thing. You know, if you're, if you're talking to everybody but your husband or your problems, that's not the best way to handle things. So, you know, you have to, you know, going into things, it's best just to be honest. Lay things out, continue to be honest, continue to talk about things. Um, you know, there's gonna always be two sides to everything. You know, you need to consider that.

[00:17:06] Ryan: I'll give Noah as an example in Indy. Um, I think it's also important to have somebody who's uniquely skilled in an area that you're not. Um, you know, you can't have to, um, you know, like alphas that want to do the same thing trying to partner together, which is what I see a lot of times in new real estate investors. Um. You know, Noah in Indy. I remember early on we had some really hard conversations and we went out for lunch and I was just like, what do you want? Like, what do you want out of life? What is your, what is your end goal? Like, what are you aspiring for? And uh, Noah's answer to me was, you know, I've just, I've always wanted to be the number two behind a powerful number one. That was a great answer. Right? Um, I think it's difficult if you've got a partner that like, especially if it's somebody who's like working under you. Um, cause in partnerships, right? There's, there's some authority levels, which I think is something we can talk about. Um, but you've got to have somebody that is like willing to play ball and stay in their lane on what they're uniquely skilled at.

[00:18:13] Bill: And I think that goes back to the synergistic aspects of a good partnership, by the way. I will love Stephen Covey's, the seven habits of highly effective people. He does talk about synergy. He also has a chapter in there about a win-win relationships and a partnership needs to continue to be a win win relationship. And if things are not working out or if it doesn't look like everybody's going to be on the same page. There's also another category that there's win, lose. Of course, you want to avoid that or lose win, but he has a category called win-win or no deal. And I liked that because sometimes you just can't negotiate to the point where it makes sense to continue or it makes sense to enter into this partnership. If you get down to it, it may just be a, because if we both can't win here, or we both can't find a way to win here. In terms of a partnership or an ongoing partnership, then we're just going to have to call it quits. We're just going to say it's no deal, and we're going to end, uh, in this friends rather than an enemies here. And I think, again, if you have that mindset going in that it's either gotta be a win win or it's not going to happen, it's not going to continue. That's, that's something that's pretty important in a partnership.

[00:19:26] In terms of evaluating a person in a partnership and an ongoing sort of way. Obviously, uh, what you bring to the table is really important and you want to not just look at what, what does the other person bring to the table, but what do I, what am I bringing to the table? And that's really a, uh, you know, question you should be asking yourself. Periodically in a partnership. Hopefully you guys are bringing the kind of different personalities, the different, uh, orientations. Somebody who's good at this and somebody is good at that kind of thing. There are tests you can take, and one of them is, um, a test called StrengthFinders. It's the Clifton strength finder test. And one of the very interesting things, uh, about. Uh, this, uh, the idea is that they present is that people don't really change very much, and your strengths are essentially submitted in by the time you're a young adult. And to try to focus on your weaknesses is really a fool's errand because you just can't be all things to all people. You can't do it all. And you know, those who are really good at accounting are often not good at, at, uh, envisioning the future. And those who are good at operations or are not necessarily good at, uh. A lot of other aspects of the job. So our giftedness is really not that wide, but it should be deep.

[00:20:53] And the question is, what are you really gifted at? And taking some going to Clifton StrengthFinders, which is probably the most popular, uh, uh. Test out there to kind of figure out where you, where you line up. I think they have 34 different strengths. Where you align up in those strengths can be really helpful in melding together a good partnership

[00:21:15] Ryan: It'll also give you some compassion for your significant other if you're married, when you realize like. Hmm. I don't have much empathy.

[00:21:22] Amanda: It's last.

[00:21:24] Bill: Yeah.

[00:21:25] Ryan: I think the other find out, the other thing we're highlighting here is the kind of character of the kind of people that you're wanting to work with, like the kind of person who goes out and takes a personality test to understand where their strengths and weaknesses are. Is a human being that's pretty mature or is becoming more mature versus like, I'm awesome. I'm like, that's probably not your guy. So you've got to have somebody that's willing to do some introspection, look at themselves, look at what they bring, and uh, you know, and have them be honest about that. Like, I know to a partnership, I do not bring like detail orientation. I'm not a detail oriented person. Um, what I do bring is more the marketing and the creative piece and some of the vision and direction, but I'm not your guy that says these are the 12 steps needed. I just know where I want to end up, which is why like an Indy, I've got somebody like Noah whose job is to then map out the roadmap for, okay, here's how we get there.

[00:22:25] Bill: And in a. Kind of defining roles, an operating agreement is really important. We've talked to, touched on this about putting things in writing, but the more you can kind of define roles and put that in writing, even in a legal document, and again, that might. Need to change as you go along. But starting with a legal document is pretty important. Now, interestingly enough, Greg and I did not start with a legal document as a matter of fact. Amanda, I'm not even sure we still have one.

[00:22:52] Amanda: You were tennancy in common in your first partnership. Was, but we do have other tenant in common agreements that have specific outlines. But you also started that partnership. Um, I think in 1994.

[00:23:06] Bill: Yeah, we started kind of on a napkin basis and I wouldn't, I wouldn't recommend that. Uh, sometimes it works. Sometimes it doesn't. I think I'm in about 10 different partnerships now, and they all have written operating agreements, maybe with the exception of Greg, but.

[00:23:21] Amanda: I think it's 14, but who's counting.

[00:23:24] Bill: 14 Okay.

[00:23:24] Ryan: Bill likes Partnerships.

[00:23:26] Bill: Well, interestingly enough, I didn't start that way and maybe this is something to kind of end up talking about a little. It was a book that kind of changed my perspective. It was built by a book by Jim Collins called Built to Last. And essentially in that book he takes 19 companies that have stood the test of time. They're, they're over 50 years old and they have, you know, even through good and bad times economically, they have become powerhouse companies. And I was kind of more of a solopreneur type of person. But when I kind of read that book and I was evaluating my business at the same time, I realized I was the only investor. I had people doing good work in property management and in rehab and maintenance and things like that. But I was the only investor. And if I was to grow my business more than a mom and pop kind of shop, I was going to have to rally around me or, you know, train some people. And it actually started with young people from college. We, Andrew, who happened to be going to the university of Oregon at the time and, uh, in business school. And he helped me put together an internships over two summers. We had 16 business students go through this internship. It was really a longterm. Uh, kind of a job, uh, interview is what it was because five of those people became partners, very young partners in their twenties with me back about 12 dozen years ago or so, maybe a little longer.

[00:24:55] Ryan: Are any of them still around

[00:24:56] Andrew: Me.

[00:24:57] Bill: Andrew  is still along.

[00:24:59] Ryan: Well,

[00:25:00] Amanda: They're still around in the real estate industry but they're not Bill's partners.

[00:25:07] Bill: But one thing that I made the decision, I wanted to grow my business and that that led to that internship, which led to the partnerships. And the subsequent decision then was to that I wanted to go back to the Midwest and having grown up all these. Young, uh, young guys having grown up in the Northwest, they did take a trip out to the Midwest, looked at a number of different markets, but all of them, except Andrew said, no, we'd rather live in the Northwest. So that actually kind of ended those partnerships, some of those guys continuing to partnership section ownerships

[00:25:41] Amanda: All of those partnerships were mostly flipping operations. And so they weren't longterm buy hold operations that we had to unwind. So it was just sell the properties and move on.

[00:25:52] Ryan: Why don't we talk about how you unwind a buy and hold partnership because we've got two of these right now. A little, definitely messier. Um, I think the, uh, Amanda, why don't, why don't you kinda take this a little bit, cause these weren't your partnerships, but you had to kind of dive in and start to pull them apart.

[00:26:15] Amanda: Well, I mean, really, you know, a buy and hold is going, you know, basically it's, we, we tried to outline expectations, you know, basically we've been over that gist of our business, you know, buy, rehab, rent, refinance, repeat.

[00:26:33] Ryan: Manage

[00:26:33] Amanda: manage.

[00:26:35] If you, you know, in our partnerships are out of state. So in our situation, we're bringing. The lenders and the infrastructure and, and, you know, providing a lot of support. But ultimately it's our partner's responsibility to manage the rehab, oversee the rental business, do that day to day. And, um. With guidance. We're not trying to, you know, throw somebody up at, at the end of the day. Yeah. When you have less than 10 properties or even 20 you're going to go out and you're going to be signing agreements and you're going to be showing your properties and you're going to have to collect the rents and you're going to have to set yourself up for the future because it just doesn't pencil. To pay somebody to do that while you're trying to grow. So, you know, there's a, you know, there's a way to make it work. And some, you know, sometimes you have to figure out a way to earn some short term, uh, money maybe flipping or wholesaling to supplement that. But ultimately it's like, well, this is what we're bringing. And if you don't hold up your end of the bargain. The partnership has to go away because we can't hold up your end of the bargain from away. And so that's, in these particular cases, um, you know, move people in and you stop managing the property and you stop collecting the rents and then you're not very communicative. And so ultimately it's sell the properties. And so, and, you know, it's not as easy as that. Sometimes you have to evict people and then you can sell the properties. And, um. You know, you weren't, you didn't go into these properties that you were going to flip them in. Um, do you know, like looking for a retail buyer?

[00:28:17] They were a good solid rehab for a rental property, but you know, when you go to put it on the market, um, you know, we're just. It takes time. You have to methodically, you know, you don't just throw 10 houses on the market and they all get under contract and sold. So, you know, you have to go through all of that and negotiate all of the deals as, you know, negotiate the sales. you know, oftentimes the end buyer's going to be a retail customer and they have the appraisals and inspections and on and on. So, um. You know, it's takes time. And at the, you know, they were your partner along the way. That wasn't holding up their end of the bargain in the day to day. They're not exactly holding up in there and in the parking, in the disillusion either.

[00:29:00] Cause there's not a lot in it for them. So, you know, and if you're the, if you're the money partner, in our case we were, it behooves us to make sure that we do the best to get our money back and manage from afar, lenders paid off because ultimately we're the ones who are gonna shoulder that cost of that. So

[00:29:21] Ryan: I think similar to kind of how like any other relationship works, just because a business partnership no longer works or doesn't make sense, it doesn't necessarily mean that like. You don't start respect that person as a person or you don't still, you know, wish the best for them. Um, you know, I think there are relationships where it's like, yeah, that was a waste of everybody's time. But I think there's other ones where it's like, you know, I, I legitimately, I want nothing but good things for you. This just wasn't a good fit. My, uh, my first business partner I ever had. Um, I, I tease new investors who buddy up real quick. That's what I did. And I worked really well for us for awhile. Uh, we did a lot of deals. We bought two rentals together, and ultimately. Um, Bill mentioned situations change. I moved from st Louis where I was working to Indianapolis and we kind of had this disconnect of, well, if I do a deal in Indy and do all the work, why am I going to pay you half when you didn't do any of the work and didn't see any of it? And kind of vice versa. So we got to this point where it was like, well, maybe this doesn't make more sense or this doesn't make sense anymore. Um, so, you know, I think keeping things. Professional trying to be amicable. Anytime you're ending a business partnership is, is ideal. Um, I use the grocery store model a lot of, if I'm at the grocery store and see somebody that I used to work with, I want to be able to walk up to him and ask how the kids were. Even if you know, maybe they, maybe they were a good person, just not a good business person.

[00:30:53] Amanda: Right, don't go scorched earth unless you really need to.

[00:30:57] Bill: Oh, absolutely. And I've learned over time to not, unless somebody is really unethical or dishonest, to not burn bridges because it's surprising how things in life come back around. And a things that I thought were dead and buried and gone have come back around and be very profitable situations between myself, uh, and other people. So don't burn bridges.

[00:31:21] Amanda: Or if you do go scorched earth, be humble enough to pull it back and apologize. Sometimes that helps. Speaking from experience,

[00:31:31] Bill: so I think in real estate investment, the best partnerships, when you think about the various critical aspects through acquisition, there's rehab, there's property management, and then there's financing those four elements. If a partner can bring a real strong presence in one or more of those elements, then there's something to be considered as you and joining together with that person as a real estate investor and as a partnership in real estate investing. Where we kind of went wrong in the Midwest and some of our relationships is, I think I was under the, uh, uh, kind of the illusion that if a person could do one of those things really well, of course they could learn the other things. Like we found some people we felt could do acquisition really well, and of course they could do the other aspects that a buy and hold real estate, uh, investment company has to do. Like property management, like overseeing contractors. And yet I was proven wrong on some of those situations, uh, that, that doesn't necessarily, and so from afar, it's very hard to hold up, you know, part of the operation and, uh, we just couldn't build the business for that person. They really needed to learn how to build a business in some, some people are really willing to do that and some people aren't.

[00:32:50] Ryan: And I want to highlight what you just said right there is they were willing to learn part of the business. Um, cause when I started out, you know, I had two rentals, um, before you and I met and they had the same people in them and I think still do, they've been there for a long time. And these were like, we joke about $30,000 pigs. Uh, these were $22,500 pigs that we paid 50,000 for a package or 45,000 for a package. Um. And you know, I know early on I can't count the amount of calls I made to Amanda of like my tenant ran over the neighbors Bush. What do I do? Like I've, I've not run into this. So it's, I think it's one thing, you know, if you have a partnership, um, there's going to be mistakes. There's going to be things they have to learn. But I think it comes down to the willingness to learn versus kind of just like. Not, it's just like choosing to like, well, I'm just not good at that. Um, and you know, I think the, the property management piece, the financial management piece.

[00:33:58] It really comes down to, I think, running a business, not so much doing real estate of, you know, when we started our answering service, um, I learned really, really quickly. Like. It's one thing to have one person on payroll. It's something different to have 27 people on payroll. Um, you know, it's one thing when you're pulling in 10,000 a month, when you're pulling in 100,000 a month, there's different challenges. So I think it's really, I think if I had to add like one other characteristic I would add to what I'm looking for in a partner, they've got to be willing to learn and they've got to be business-minded.

[00:34:32] Amanda: An operator, you have to have a business operator, so you have to, you know, back to the Steve's for Apple, you know, one's visionary, one's operator. It works. It's a really great, you know, like you can, there's many examples of really, of companies that are working well that it's, you know, like if you look at their core characteristics, one's a visionary and one is an operator. I mean, that's really basically breaking it down because it's there more than that, but it helps.

[00:35:03] Ryan: So Bill, you know, you're in the middle of 14 different business partnerships kind of in closing here, why don't you walk us through how, how you find a good partner, where, where are these people gonna come to you from?

[00:35:16] Bill: Gosh, you know, uh, finding a good partner is like getting out there and networking and, uh, you know, going to your local investment clubs, your REIA groups, uh, talking to people, uh, you know, looking for people who are like minded, who have similar longterm goals as yourself. And that's really what you're looking for is something, a course. And as Andrew mentioned earlier, some partnerships or, or. One and done. Some partnerships are passive and the other person's active. But if you're looking for a partnership where essentially you're, you're both going to spend about the same amount of time, have the same amount of percentage interest as owners, uh, and that by the way, is something that needs to be negotiated. And sometimes over time that may need to be renegotiated, but you're, you're really, uh, out there in the marketplace just like you're looking for properties, you're looking for really a players. And by the way, one thing we didn't touch on too much is that some of the folks who, who may start as a purpose, people working on your property, uh, we have a partner in Dallas and he, uh, and I am partnership with Greg in Dallas, but this person became a third partner with us and he started as a laborer. And that. This person, his name is Jay, and he showed himself to be very diligent and, uh, you know, had an ownership mentality from the beginning. Uh, these decisions were just as important to him as they were to us. We took note of that and, uh, be on the lookout for a players who you will eventually. Want to invite into your life as a partner because a players are going to want a piece of the action. They're going to want to have some kind of ownership interest, and you want them over time to have ownership interests because then they're then you're all looking out for your own best. You're in a mutually beneficial relationship, so be on the lookout maybe in within your own organization of raising people to the level of ownership. Uh, that's not something to shy away from. It's a good thing. And, uh, we've kind of talked about the good, the bad, and the ugly, and there's all that in partnerships, but at the end of the day, you really want to find synergistic relationships, whether they're partners or not partners. There are people in your network, and I guess I would leave you with that. Again one plus one is the equal more than two needs, the equal three or more to find the potential of a great partnership.

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