For example, a creative buyer in Albuquerque induced a seller to discount an 11-plex by over 20% and the carry most of his equity on a wrap, largely on the strength of his partners’ financial statements. Both of the buyer’s partners happened to be millionaires, not bad company to keep when facing an experienced seller.

Technique No. 42 Borrow Partner’s Money for Down Payment

Frequently an investment partner can be persuaded to loan the buyer all or part of a down payment. The loan may or may not be secured by a trust deed on the property. In any case, the buyer who is just short on funds for the down payment is probably better off to avoid giving the partner an equity position in the property unless absolutely necessary. Equity sharing partnerships are costly when calculating over the entire life of the investment.

Two case studies in this section show how investment partnerships can contribute to the success of real estate purchases. In one St. Charles, Missouri, transaction, an equity-sharing partner on a 4-plex deal was able to raise $5,000 of his contribution by borrowing it from his mother. The buyer of a 6-plex in Seattle did a similar thing. His mother came up with $10,000 as an investment to help him buy the property. (It was not just a case of maternal support – the women were shrewd investors who received a good return on their money.)

Technique No. 43 Borrow Partners Money for Down Payment Until Your Money Comes

In this variation, the partner does not have to leave his cash investment tied up in the property in exchange for an equity position: he gets it all back plus interest as soon as the buyer can put together the case. The partner puts his money to good use and still comes out with part interest in the property.

Technique No. 44 Your Cash Flow/My Equity Or Some Combination

Often the partner provides something other than cash to make the deal fall together. There are many illustrations of this technique. For example, a partner in a SFH transaction in Southern Florida recently provided property to which a created second mortgage was moved. In another Florida case involving a large motel a partner was brought into the deal because he had some stock that was used as collateral in order to borrow $20,000 essential to the deal. Like Bob says: “If you don’t have it, someone else does.”