Investing in real estate will make you look up “real estate investors near me” online at some point. But it’s not always necessary for business.
Table of Contents
- Who Is a Real Estate Investor?
- Real Estate Partnership 101
- How to Find Real Estate Investors Near Me
- The Pros and Cons
- How Can Mashvisor Tools Help
- The Final Decision
If you’ve been navigating the real estate market for some time now, there is a high likelihood that the idea of entering into a real estate partnership has crossed your mind—at least once.
The need to look up “real estate investors near me” has many different reasons behind it. Perhaps you need someone to share capital with, for example. Maybe you are looking for an agent with experience—or you simply prefer teamwork in this business.
Whatever the reason behind this thought, you should first get acquainted with the real story behind a real estate partnership. Sometimes this is simply unnecessary, and it will only bring up more work—and not much profit.
Scroll down to get familiar with the emergence, functioning, and pros and cons of entering real estate partnerships.
Who Is a Real Estate Investor?
We’ll start by explaining the very core of the real estate investing business—and that would be the real estate investors themselves. And for those who are just stepping into the market, here’s a brief overview:
By definition, a real estate investor is a licensed individual who allocates the finances toward purchasing an investment property.
However, the act of purchasing property (and renovating it in some cases) isn’t the only thing an investor does. They also evaluate the current market situation to generate profits.
In this business, there are active and passive investors.
Active investors choose to do the job (as in, investing in property) themselves, while passive investors hire a real estate company to do the work on their behalf.
While we’re at it, it’s worth noting that there are different types of real estate investors can choose from, including:
- Commercial real estate
- Residential real estate
- Industrial real estate
- Land
At the moment, our focus is shifted towards residential property and generating profits within this sphere of investing.
The road to becoming a real estate investor—and a successful one, at that—requires taking care of a couple of essential factors. One of them is to have prior knowledge of investing in real estate—and knowing how to work your way around the market, including tackling the numbers, generating leads, and so on.
Once you’ve excelled in the theoretical part, you’ll need capital. And from that point on, your investing journey can officially begin. On a related note, you can be a solo real estate investor, or you could choose to work with a partner.
That might be where your initial idea about researching “real estate investors near me” came from here. Fair enough; it’s a common business direction—especially with beginners. However, it’s crucial to distinguish between situations where this is needed—or even recommended—and when it is entirely unnecessary.
Entering into a partnership with a fellow investor could, indeed, contribute to your career and investment portfolio, but it can also make it more difficult. It all depends on your goals and expectations.
Real Estate Partnership 101
Before conducting extensive research on real estate investors near me, you must learn the basics of this type of partnership.
In essence, real estate partnerships are created by joining forces of two or more investors with the same common goal—allocating their finances towards investing in a property.
How does this partnership work?
As we mentioned a moment ago, this type of partnership forms when two (or more) investors come together and work towards generating income from profitable real estate property that is currently available on the market.
Within such a partnership, the investors will combine their capital, exchange information, and consult in order to achieve higher profits. It doesn’t have to be just the two investors, though; it can be a group of investors.
The entities that make up a real estate partnership are:
- Limited Liability Company (LLC)
- Limited Liability Partnership (LLP)
- S-Corporation
If it’s a group of investors we’re talking about, it is called a Real Estate Limited Partnership (RELP). Within this group, there is essentially a general partner and other “limited partners.”
The general partner (GP) typically takes on more responsibilities—and, therefore, receives a larger share of profits.
On the other hand, limited partners (LP) are there to contribute to the investment strategy with their knowledge, finances, or connections with the market.
RELP is the most common type of partnership on the market.
Also, real estate investors looking to enter into such partnerships should know that taxes are eliminated based on a personal and corporate level. It is because the ultimate income (or loss) passes through each investor, who is additionally protected from claims.
Active vs. Passive Real Estate Partnerships
There are two approaches to real estate partnerships: active and passive relationships. Let’s explain each one briefly.
Within active partnerships, you have multiple investors who are actively involved in the entire process—in one way or another.
For instance, an investor who’s also the head of a property management company can team up with two or more investors and delegate obligations. The head investors can take care of leasing and paperwork, while other investors can deal with maintenance and repairs.
It’s an advantageous approach because everyone is employed at any given moment. And that further increases positive cash flow—and keeps the property clean and ready for new tenants.
On the other hand, we have passive real estate partnerships. It’s quite similar to RELP.
Here, the limited partners are, quite literally, “limited” to specific financial performance and lack any major say in the investment strategy. The head, or general investor, has the final say.
Passive real estate partnerships don’t necessarily represent a wrong choice.
For example, if the general investor builds up a strong investment strategy, limited investors might decide to invest a significant sum of money. If the investment turns out to be successful, they can expect a generous return without having to do the hard work.
Related: Ultimate Guide On Real Estate Investing for Beginners
Forming a Real Estate Partnership
There is one more thing before we get into the proper way to research “real estate investors near me.”
Suppose you are to be the general investor. In that case, you should know how to form such a partnership and what are some key points on your list that should be checked.
Here’s what you need to do:
Talk About Needs and Expectations
The number one rule for developing any plan or strategy is pre-planning—or, in other words, brainstorming.
First, look at what you have at your disposal at the moment. So, consider what the current situation on the market is, what your expectations and goals for this partnership are, and the like.
If you’re entering into this agreement with beginners, you’d want to go over the basics of how to invest in real estate and include their thoughts on the matter.
Since it is an actual partnership, it’s imperative to communicate needs and ideas with your colleagues. Consider other investors’ views of your situation—and take into account ways in which they could contribute.
Draft an Agreement
Drafting an agreement brings you one step closer to investing in rental properties with one or more of your fellow investors.
In brief, it’s a document that states and confirms the ideas mentioned above. This agreement outlines the missions of this partnership, and its purpose is to communicate the responsibility and accountability among investors who are a part of it.
Form an Entity
Before you make it official, you should agree on an entity, which we mentioned a minute ago. Your options include:
- Limited Liability Company (LLC)
- Limited Liability Partnership (LLP)
- S-Corporation
It is recommended that you consult a financial expert to provide you with a more extensive and in-depth insight into the financial side of this agreement and help you determine if your options are valid.
Double-Check Everything
The last item on your list would be to double-check everything. That’s a business matter, and you shouldn’t take anything lightly.
Make sure that you’ve gone over the agreement, points, and goals with your fellow investors one more time before officially starting with the actual business. You must be 100% sure that everyone is aware of their responsibilities—and possibilities—within this agreement.
How to Find Real Estate Investors Near Me
Now that we have taken the time to explain the basics of real estate partnerships—and the process of planning, let’s address our main issue:
How to find real estate investors groups near me.
Since the investing network has evolved, there is now more than one way you can easily find and access real estate investors near me.
Let’s mention the most commonly used ones.
Crowdfunding
The first method you can try is crowdfunding.
Crowdfunding represents a way to raise money for your investment by pooling capital from multiple investors. In other words, it’s like peer-to-peer lending. It differs from the traditional way of investing and pulling capital because investors aren’t able to trade shares.
Basically, it’s a way to gather money from multiple platforms and investors.
It’s an efficient way to connect with real estate investors near me, and it can certainly pay off.
Related: Learn and Experience the Power of Real Estate Crowdfunding
Online Resources
The second and probably the most popular way of finding a real estate investors association near me would be to rely on online resources.
With all the possibilities offered by the Internet, we can say with absolute certainty that this is a reliable way of researching. There are hundreds of websites—and they vary depending on their purpose.
You have educational, community, and listing sites—all depending on your preferences.
The most popular ones among investors are:
- Mashvisor
- Roofstock
- HousingWire
- ActiveRain
Real Estate Investment Clubs
Another way of looking up private real estate investors near me is researching and joining investment clubs.
These clubs are formed for the sole purpose of bringing investors together—and combining their knowledge and expertise in order to expand their portfolios.
They are nothing new; these clubs have been around for decades, and they’re serving their purpose well.
Target Network
In some situations, you won’t have to go far in search of a local real estate investors network near me. Look at it from a wider angle:
There might already be prospective investors in your community.
It doesn’t need to be limited to professionals, though. Your family and friends can also act as investors in this partnership. However, sometimes it’s tricky working with family.
Also, know that they’ll probably need to brush up on how to get into real estate.
Our advice is:
Think twice before you put out a call during the next family event or gathering with friends.
Social Media
There is nothing that social media cannot do for you. Seriously, it can even help you keep up with real estate investors meetup near me.
To keep track of potential investor gatherings and groups in your community (or close to it), use social platforms like Facebook or LinkedIn and get in touch with fellow investors.
Bank Financing
The last option would be to go straight to the bank and ask for funding from lenders.
Truth be told, there are many different—and appealing—opportunities for investors looking to pull capital and allocate those finances towards investing.
However, if the investment goes poorly, you could find yourself in trouble with the bank—and without enough money.
Related: A Guide to Creative Financing for Real Estate Investors
The Pros and Cons
Now that you’re familiar with how it works and know how to find real estate investors groups near me, it’s time to delve into the advantages—and disadvantages—of choosing this unique approach.
Larger Investment Opportunities
The first and most obvious advantage of entering into such an agreement is the potential for greater investment—both financial and property-wise.
If you were to act as a solo investor, your finances might limit you to only investing in an apartment or a single-family home. But with capital from multiple investors, you typically get to invest in more than one property and anticipate higher cash on cash return.
Working With Professionals
The plus side to entering a real estate partnership is that you will be cooperating with other professionals—people who share your knowledge and expertise.
That will facilitate the work, resolve any matters that should be addressed, and deal with any potential problems that may arise during the investment process.
Conflict in Styles and Approaches
Even though your responsibilities and duties are clearly outlined in the agreement, no one can guarantee that, at some point, there will be no tension among investors.
The chances of this happening are higher if it’s a group of several investors who disagree on strategic approaches.
That’s why it’s very important to do your research when finding real estate investors near me.
How Can Mashvisor Tools Help
Taking on an investment opportunity by yourself is already a job that requires you to be fully involved and focused 24//7. Entering into a partnership, though, is even more demanding.
The good thing about Mashvisor’s tools is that they can help—even when you’re not entering the investment business on your own.
To start off, if you haven’t agreed on the location you’d like to check out, our Property Finder will assist you in finding the most profitable properties on the market.
And since it is probably going to be a significant investment, you will need to deal with large numbers. We can help with that, too. Mashvisor’s Rental Property Calculator can give you a precise estimate of what you can expect from your investment strategy.
And that, in turn, can help you decide whether you should proceed.
Mashvisor’s Rental Property Calculator allows investors to obtain estimates of potential returns from either a traditional or Airbnb rental strategy.
Another feature that’s particularly important for today’s issue would be the Real Estate Agent Directory. We’ve talked about ways of finding investors near you; this is a way to find top-tier real estate agents across the country and connect with them.
The Final Decision
We’ve successfully managed to cover the issue of searching for real estate investors near me and discuss whether it is a good idea or not.
So, let’s sum up what we’ve learned.
Frankly, real estate partnerships are nothing new, and such types of agreements have been present on the market for decades now. The real issue is whether it would be crucial for your investment strategy or not.
Before you make it official, you should do a background check on the investors, clearly state the responsibilities, and ensure that your goals are “in tune.” The next step would be actually finding real estate investors near me.
That’s fairly easy; investors have several options at their disposal now. The options include crowdfunding, banks, target networks (like family and friends), online resources, social media, and joining real estate investment clubs.
Even though it promises a more substantial and more profitable investment—and you get to work with professionals—you should be aware of the general atmosphere and approach your fellow investors go by. Disagreements happen, and they can jeopardize your investment.
Luckily, Mashvisor is here to help you plan and turn your strategy into reality.
Sign up for a 7-day free trial of Mashvisor now, followed by 15% off for life.