Changes in the real estate market create new niches and investment strategies. One must be able to work well with the changes as this is one area of investing that is constantly changing and updating. If you are new at real estate investing, you should begin working with a mentor and complete some transactions with a partner to reduce your financial and liability risk. A mentor will help you to avoid the common mistakes made by many real estate investors. Begin to educate yourself; do some research on the internet, attend seminars and join a real estate investing association.

What should you look for in a real estate partner or mentor?

You want to find someone that you are able to communicate with and relate well to; someone who agrees with you on important investing issues. As with any type of investment, the greater the risk, the greater the return; therefore, choose someone who takes the same degree of risk that you are comfortable with. Your first real estate partnership should be with someone who will also act as a mentor. Meet as many people in the real estate investing area as you can; network and learn from them. You will find that many experienced real estate investors are looking for partners; some are looking for people to train as partners.

Take your time and find a partner or mentor who is open and honest; one you can trust to steer you in the right direction. Finding real estate investors to work with is the easy part. Once you get started, you will find that there are a lot of people you need to know, including investors, brokers, property managers, rehab contractors, title companies, mortgage lenders, insurance providers and anyone who services real estate investors. A successful investor has all the necessary connections.

An experienced mentor or real estate partner will know how to analyze a deal to structure it for success. He will be able to show you deals he has worked on in the past; he should be able to show consistent profits, using a variety of exit strategies. Some deals are very profitable using short term transactions like wholesaling, where you buy the property very cheap and sell it quickly for a profit. Others are better when held for a time, for cash flow, as with a land contract or lease option. Ask the person you are considering working with if they have experience with seller financing as this is becoming the way to invest in today’s market.

What do you expect out of a real estate partnership?

When you find your mentor, a real estate partnership will naturally form. Mentors like to work partnership deals while they show you the ropes; there’s no training like hands-on training. Do you know what you are looking for in a real estate partnership? How much involvement do you want in the financial investment and management responsibilities? Are you looking to be a very active partner or one who stays behind the scenes? Are you interested in commercial or residential real estate? Are you looking to invest in rural, urban or suburban areas? What type of real estate deals are you the most interested in; wholesaling, holding for cash flow, or is there another niche in today’s market, like short sales, that interest you?

Once you worked out the financial and work responsibilities, discuss the profit split and how and when you will be paid. When will you begin to see profit? How much do you invest now? What are the risks?

Be sure to discuss liability exposure and how your will protect your personal assets. How is the partnership to be set up? Some investors recommend that each real estate transaction be conducted using a different limited liability company.

A good mentor will go over all the important issues so that you understand the real estate partnership, your financial and personal responsibilities, liability risk, financial risk and potential profit.

To the average person, real estate is a shaky market and one should think twice about investing in property now. The experienced real estate investor sees things in a much more positive light. There is a very high supply of bank-owned real estate, known as REO property, foreclosed homes, pre-foreclosed homes, motivated sellers and much more. The demand for these homes is relatively very low; therefore, real estate values are down and houses can be bought cheap. According to simple economics, the laws of supply and demand, this is a great time to begin investing in real estate.

Join a real estate investors association and meet real estate investors and property managers. See what everyone is doing and if it is working for them. Decide what you think will work for you and meet the people who have been successful doing it. If you do what the successful people are doing and begin working with a mentor, you will be on your way to financial success in real estate investing.