When it comes to partnerships, it’s been said one plus one does not equal two, it equals five! In other words, partnerships can help you achieve your goals faster than going it alone. How do you find partners, how do you vet them, and how do you minimize partnership pitfalls? Those are the topics we’re going to cover in this article.
How to Find Partners
Are you looking for a business coach, a real estate meetup, or other passive investing professionals in your industry? Give Meetup.com a try. I visited Meetup.com and typed “tennis” and my zip code. The first result was “Saturday Morning Open Pickleball.” This group is open to all experience levels and meets on Thursdays at 7 pm. If I wanted to improve my game, I’m sure this would be a great start.
Podcasts usually have a Facebook business page where you can meet other people interested in the same topic. We have a business page for Storage Investor Nation with over 600 members who help each other learn more about self-storage investing.
Your social circles are another good way to start looking for partners. One of your friends or family members might be interested in growing their passive income but aren’t sure what to do. The two of you could start a Saturday morning coffee and investing meetup to talk and meet with other professionals who have similar financial goals.
Vetting Potential Partners
Vetting partners takes time. Dan has a good teaching on raising capital where he describes the “Know, Like, Trust” trifecta. It takes time to get to know someone to see if you like being around them and what they stand for. Then you decide if you can trust them. This process can take months, or longer, before you feel comfortable partnering with someone.
During the “Know” phase, things are mostly on the surface. You gauge a person’s knowledge and experience.
You learn about their background and other common interests. At some point during the “Know” phase, you move into the “Like” phase. You can usually know after one or two meetings if you like what someone is saying and how they represent themselves. Assuming the “Like” phase goes well, you move into the “Trust” phase. Would you trust this person with your capital, personal information, and, ultimately, your future?
You can check their social media profiles and references or former business associates. You might go so far as to run a background check. With friends and family, this step might not be necessary, but with people you’ve met through a meetup, a background check could give you another level of comfort.
Ultimately, you can’t know how a potential partner is going to operate and make decisions until there is a business to run together. But don’t let that stop you from taking a chance with someone. You must take risks to reap the rewards.
Three Misalignments that Kill Partnerships
Misaligned interests, motivation, and values, get any one of these three wrong and it will kill your partnership.
In 2018, I partnered with long-time friends who owned a successful homebuilding company. They wanted to get into self-storage and expand their company. I spent about a year looking for deals while taking care of details at the homebuilding company. My time was divided between two important tasks. How successful do you think I was? In this case, our motivation and values were aligned, but our interests were divided, and the partnership did not work out.
In 2019, I partnered with successful commercial real estate investors who were developing one self-storage deal and wanted to do more. Unfortunately, they didn’t fully understand the competitiveness of the storage market. Returns were too low for their taste, and we put nothing under contract. In this case, our interests and values were aligned, but when opportunities presented themselves, they were not truly motivated to do storage deals.
Finally, toward the end of 2019, I partnered with Jon Allen. We had the same interests, motivations, and values. He and I put two storage deals under contract, and later closed one with PassiveInvesting.com, our Gastonia location.
In January 2021, Jon and I partnered with PassiveInvesting.com. I had known Dan for a few years (I attended his first meetup in Charlotte!) and knew we had the same values. Their motivation and interest in self-storage matched the market. Based on my experience, I knew how important these factors were.
Since 2021, we’ve closed on $120 million in self-storage, and as of the time of this article, we have another boat and RV deal under contract with more to come. All three critical factors of a partnership were aligned from the beginning, and that has led to our success.
We’ve covered practical ways to find partners, how to vet them, and the three misalignments that kill partnerships. Don’t be afraid to step out of your comfort zone and seek out people who you can partner with to help you achieve your goals. Remember, when it comes to partnerships, one plus one equals five!