Business Partnerships
A business partnership might be a simple way to get started in the beginning. You contribute the time and energy, and someone else puts in the cash and/or credit. You will agree to a split on the profits of the deal in advance. Partnering with someone who can be your private money lender will help you start up your business without the worry of how you will fund the deal. As in all business partnerships, it is imparative that both parties understand their commitments and financial obligations. There should be an agreement between the parties of the timeline on the project, and an exit strategy for when the project is completed . Have the terms and agreements in writing, so everyone is clear on their role and responsibility. Finding someone with money to loan is a big step. Successful completion of your project prepares you for your next step , and will be a valuable learning tool .
The project gets funded without the use of your cash or credit, and you usually don’t have to make monthly interest payments while the project is running . This should be indicated in your formal agreement.
Sacrificing 50% of the profits (or more) of your project is much more expensive than paying a few points and interest to a hard or private money lender.
A business partnership is a great way to attract someone to help you get started in the business before you have relationships with lenders that trust you. If you have trouble recruiting private money lenders in the beginning stages of your project, you can use business partnerships to gain experience and a track record to show other private money lenders. The experience will help you gain credibility and earn trust. In the field of real estate, there are individuals who make private money loans regularly , and these people are searching for great investment opportunities. Prepare now, and be ahead for the next step in your business. On your next deal , you must be able to secure a private money lender as an investor, and retain more of the profits for your business .