5 Keys to Building a STRONG Real Estate Business Partnership

Hey YouTube, this is Cody. Welcome back to the channel and Happy New Year's. Today we're talking about how to build the perfect partnership. Now there's really 3 pieces to this. Christian and I have built a pretty successful partnership in the way that we define success. We're really happy with it, and I want to put it out there that you can do exactly what you want to do without a partner. Typically, you can hit all your goals without a business partner. However, what we've found is that it is much easier to go further, faster if you have the right business partner. Christian and I have both gone through terrible dumpster fires of partnerships that have cost tons of time and tons of money. And then we have our partnership that's worked really well and we've outlined what actually makes it work. And so I'd like to start this out. Number one, it comes down to communication. I'm not just talking about being able to communicate for yourself. You got to be able to get the other person to communicate. I got Christian to communicate exactly what he wanted to do. Most people only listen to what people tell them rather than dig for what they actually need to know. Because not everybody in the beginning, if you're looking at partnering with someone, not everybody in the beginning tells you everything you need to know to make sure that you can make a successful partnership out of the two of you or the three of you, depending on how big you're building that organization. When Christian and I started working together, he voiced he wanted to scale. He wanted to get to 30 units by 30. He had 2 units. I got him to double his portfolio. I got him to buy another duplex. He got 4 units. And then I said, what if we just bought a 38-plex? He didn't know how to do that. However, I did. I knew how to do the seller finance piece. I knew how to come up with the money down, and we bought it with zero money out of pocket. Now, Christian didn't know how to do that, but I got him to communicate what he wanted. And long term, he wanted to retire his wife. We built a path to get there, but in the beginning, your ability to not only communicate what you want, but to get people to not omit data that you need will determine if you actually make this thing work. Something else to note on the communication front: if you want to build a really successful partnership, you have to be able to be direct. Not everything goes super well. Not everything is going to just flow. There's going to be times where gears are grinding and You just have to be direct. Christian and I, based on something I'm going to share a little bit later in this video, have gotten into disagreements where he sits down with me and he says, we just need to duke this thing out for 5 minutes. We can be very direct. And that is something that I bring more to the table than Christian, because Christian hates being direct. He's not confrontational. However, if you're going to go through painful points, which you will in a partnership, it's just going to happen. You ought to get through it rather quickly because it's not fun to dwell there. So, what we've worked on together is the ability to communicate exactly how we're feeling, exactly where we need to go, and then to be direct enough to get through it quickly. So, we're not dwelling on uncomfortable waters where that could derail the partnership. Now, moving into the second piece, and this is really important. Once you establish that you can communicate, you can get the other party to communicate, and you understand where you're going with your goals. You need to outline your principles. If you do not outline principles, if you're not principle-based, you're just wandering. Christian and I don't like to just wander. We established our principles early. Now we've shared our principles for real estate. We haven't shared all our principles for actually operating a partnership. Christian and I don't compete. We will not compete. We don't have ultimatums. I learned that one the hard way. I used to give him ultimatums and that started driving us apart. I grew from that one, but we established our principles early. And as long as you don't violate those principles, your partnership should just keep growing together. As long as you're making progress on the business, you're actually still working on the business. A lot of people don't outline their principles and that gets them caught up in violating what they should have set out as a rule. And it inflicts pain, whether it's physical or mental pain, on the other partner. That will drive you apart. You're either growing together or you're growing apart. There have been times where Christian and I grow apart. When I moved to Union, we started growing apart. When I used to throw out ultimatums, we started growing apart. When we outlined the principles of, okay, we need to be local while we're growing the business and I can't be throwing out ultimatums, we started growing again. And that is really important to note because a lot of people don't outline all these principles in the beginning. Well, we'll just wing it. If you don't have rules, there's chaos. And so we set out the rules. And as long as we don't violate those, we keep working on the business. Our business grows and we don't tick each other off. It's really important to not add any extra stress or pain to the situation because there's going to be enough in business anyway. It just happens. The last thing here that I want to really share with you is keep the end in mind. What happens when you hit your goals? It's not a matter of if, but when. Most people think, well, what if we could do this? What happens when we do this? Should be the frame of reference. It should be your mindset on things. It's not that difficult to hit most people's goals. It's often quite simple when you think about it. Oh, I want to go buy 100 units. Okay, buy 10 10-plexes. Well, I don't have the money for that. Okay, well, how do you borrow it? How do you position yourself to borrow it? You start breaking out the steps and it's actually not that difficult. Christian, I set out a goal of let's get to 100 units in 2 years, 24 months. We got there in 11. We thought about it in the beginning. Okay, well, what happens when we get there? We kept the end in mind. Well, we're going to start paying off the first block of real estate and then we'll scale up again. And so what we did is we got to 100 and we had an idea of, okay, we're going to keep scaling up, but we're going to pay off and delever the original stuff so we don't lose it. It's one thing to build a successful partnership. It's another thing to never destroy it. I mentioned this in the beginning that you can build something and you can grow it, but it's one thing to never lose it. You got to be able to communicate your goals. And then once you get there, what happens when you go to the next level? What happens if you get to 100 units, you pay it off and your partner doesn't want to work anymore? If you didn't establish that in the beginning, Granted, they may have earned the right to not work anymore. But what happens to you guys or you gals? What happens to the group, to the organization if you didn't communicate what happens when you actually get to where you want to go? Because a lot of people will get there. If you set out a goal of getting to 20 rental units or $10,000 a month cash flow or $5,000 a month, it doesn't take that long to get there. And once you start making a little money, you're going to have different emotions. You're going to have different feelings on the partnership. You're going to have different feelings on where everybody's at, what your next steps are. So it's really important to outline what happens when you get there, because if you outline in the beginning, I just want to get to 100 and then your partner wants to get to 1,000, well, great. That might be the stepping off point where you have a buyout agreement, but you can start assessing what is the logical step when we get there. Because when people start looking at their situations and they start playing the comparison game, that's the reason we don't compete. It's one of our principles. When people play the comparison game like, okay, well, they're having more fun than I am, or they're doing this, or I'm doing that, that can drive you apart. And it's really important to note that you're either growing together or growing apart. So if you want to build a successful partnership, you got to be able to communicate, be direct the whole time, get to have your principles so that you're not just constantly wandering around hoping that it works. And you got to think about, okay, what happens when we get there? Because Real estate's simple. It comes down to figuring out how do you buy it, which is deal debt equity, how you never lose it. Everything is simple until you add people and partnerships add people. So it's really important to think back to 5 years, 10 years ago when you established, okay, I want to get to this place. If future you gets there, it's probably worth figuring out how to never lose that. And so if you want to build a super successful partnership, you know, all the things I just mentioned, but you need to think about what happens when we get there. Because when you get there, you're going to be thinking about things a little differently than when you first set out those goals. But understand that past you really wanted to get there. And a lot of people can take that for granted and that can tank a lot of partnerships. So keep that in mind. But that's it for today's video. If you want to see more content on partnerships, whether it's business or real estate, drop in the comments. We really appreciate you tuning in. And make sure to hit the subscribe button so you can see our future videos. Thanks.