Real Estate Investing Guide: How to Find Joint Venture Money Partners
Is the lack of money stopping you from making your first income property investment? If I got a dollar every time someone told me they wanted to invest but they didn't have the capital for it, I'd probably be able to purchase a property with that money by now. The truth is, you can just as easily make your first investment without using your own money. What you’ll be using instead is the power of joint ventures, something I’m going to cover in this article.
How to Purchase Rental Properties without Your Own Money
In order to purchase a rental property without your own money, you need to find money partners to make deals with. These are joint venture partners who will bring their money and mortgage capability to the table while you provide other resources such as knowledge, connections, time, and hard work. I am going to show you my method of finding money partners from start to finish and, if you follow these steps, you will be able to close your first JV partnership sooner than you expect.
The whole process of finding money partners consists of eight steps that include the following:
Identifying potential partners
Qualifying them
Introducing them to the idea of investing
Making disclosures
Closing the deal
Filing paperwork
Managing the project
Paying off the investment
You will begin by identifying potential partners from your three circles of influence:
1st connections - family, friends, colleagues - people you know really well.
2nd connections - friends of friends - people you know through another person.
3rd connections - complete strangers.
By getting in touch with people from these three levels of connections, you will be able to qualify the prospects to whom you’re going to present the idea of investing. After presenting the idea, you need to disclose what you’re going to be using the money for and what types of risks are involved in the process. Once you close the deal, all that’s left to do is fill out the paperwork and get to work on managing the property to pay off the initial investment. Then you’re free to move on to the next project and scale your business with JV partnerships.
How to Find Joint Venture Partners
The first step to finding joint venture partners is creating your 3 circles of influence in which you will prioritize 1st connections, then 2nd connections, then 3rd connections. Keep in mind that the first connections can easily be messaged from your cell phone contacts, whereas the second connections can easily be messaged through your social media platforms (i.e. Facebook and Instagram). Lastly, the third connections can be established by adding new people to your social network that are strangers and then messaging them.
Your goal with each of these three categories is to set up 15-minute discovery calls to simply catch up with your 1st connections and get to know your 2nd connections. Keep in mind that this call is not there to pitch them anything! Commit to reaching out to 2 people per day out of your list of 1st connections for the next 2 months. If you run out of 1st connections, move onto your list of 2nd connections until the end of the 2 months. By the end, you would have connected with over 100 people.
As far as the approach to these calls goes, the approach for the first connections will be more casual, and not as formal, whereas your approach for the second connections should be more formal. During the discovery call, aim to catch up with the person and have a casual conversation during which you will mention your new business venture where you’re trying to connect with money partners to purchase income properties together. Leave them curious to learn more and they will most likely start asking questions about it. This is a great opportunity to schedule another call with them to talk about joint venture partnerships in more detail.
In general, keep it light, keep it friendly, with a hint of professionalism. Remember, in order for them to do business with you, they must like you, know you, and trust you. Instead of writing a script, keep the call as natural as possible because scripts can come off as inauthentic and people can easily detect that. Once the discovery call is completed, schedule a date & time for a more in-depth conversation with them to discuss a joint venture partnership together.
If everything goes well during the longer JV call, you should be one step closer to finalizing the deal. At this point, you should give your partner contacts for whomever they may need for next steps (i.e lawyers, mortgage brokers). After the call, make sure to send them a follow-up email to clearly outline that this is a personal business relationship and congratulate them on being accepted into your JV program as a money partner.