Tailwind Talks
Tailwind Talks is a podcast for high-performing professionals who want to build serious real estate portfolios without leaving their careers. Hosted by an airline and military pilot turned investor, it dives into actionable strategies for scaling your real estate portfolio while balancing the demands of a full-time job.
Tailwind Talks
The #1 Real Estate Investing Tip I Wish I Knew Earlier | Why Partnerships Are a Superpower
Ever wondered why some real estate investors seem to scale their portfolios so quickly while others struggle for years to add a second property? The secret might be simpler than you think—strategic partnerships.
Drawing from my experience as a part-time real estate investor juggling careers as both a legacy airline pilot and military instructor pilot, I've discovered that my biggest regret wasn't a bad purchase or missed opportunity—it was waiting too long to bring on partners. While I hesitated until my second deal, I now recognize that partnerships are the ultimate superpower for new investors looking to break into residential rental real estate in 2025 and beyond.
My reluctance stemmed from a well-intentioned place. I was comfortable risking my own capital while learning the ropes, but the thought of potentially losing someone else's money created a mental barrier. This protective instinct actually limited my growth during critical market phases. When I finally partnered on an eight-unit acquisition where I was $30,000 short, that partner's $20,000 investment (earning them a 30% stake) eventually returned about $95,000 plus ongoing rental income. This experience fundamentally shifted my perspective.
The right partnership brings more than just additional funding. Multiple borrowers with stable incomes strengthen loan applications, as lenders evaluate both the investors and the investment. However, partnership selection requires careful consideration. I recommend finding partners among those you already know—friends, family, colleagues—who share your investment timeline and philosophy. Someone looking for quick returns won't mesh well with my 10-30 year horizon. Formalize these relationships through proper legal structures like LLCs with comprehensive operating agreements that clearly define responsibilities, profit distributions, and exit strategies.
Whether you're just starting out or looking to accelerate your existing portfolio, consider how the right partnership might help you overcome your current limitations. What's holding you back from reaching your real estate goals? The answer to that question might reveal exactly what you should be looking for in a potential partner.
What is up everybody? My name is Cole. I'm a part-time real estate investor, full-time legacy airline pilot and a part-time military instructor pilot. Today I'm talking about what I believe to be the number one tip, other than wearing sunscreen when you're on a work trip, like I just was. Otherwise you'll end up like a lobster, which I currently am. My next tip, beyond that, if you wanna start in residential rental real estate in 2025 and beyond time is to go get yourself a partner.
Speaker 1:I didn't get a partner until my second deal and I really didn't take on too many partners until later on, closer to where I'm at right now, and if I would have taken on partners earlier on, I could have scaled a lot faster. The reason I didn't is because I didn't know what the hell I was doing. So how am I going to bring on a partner and how am I going to? I'm okay. I'm more than okay and I've done it many times. I'm more than okay with risking my own money and throwing my own money out the window. I've done it many times. I've done it many times and I'm sure I'll continue to do that down the road on accident. But I'm much more okay with losing my own money because I have my own sources of getting income and I have my own job and I know my own finances. So I'm okay with losing my own money, but I'm not okay with is losing other people's money, and that's what prohibited me from getting a partner for my first deal, and it took me until my second deal to get one. But I really just dabbled with it there. I didn't really lean into it until a while after that second deal and if I would have done it sooner, I would have had more properties. I would have got the benefit of inflation. What happened after COVID with all these price increases. I would be able to benefit from all that a lot quicker if I would have just taken on a partner.
Speaker 1:And here's why I think that taking on a partner can answer a lot of questions that you may have. I don't have enough money, I don't know enough, I don't know where a property is Like, whatever these questions that you might have are, a lot of times you can fill those questions with a partner and obviously you want to do as much as you can on your own and make sure that you're well-rounded, because you don't want to just be somebody with no money and no plans and no ambition, and then bring on a partner. That's going to get you nowhere. But if you have, let's say, a 90 solution to what you want to do but you need that 10 and that 10 is really valuable, aka money then bringing on a partner can really do wonders. Because that's exactly what happened to me my second deal. I wanted to buy this eight unit. I had to sell the single family house that I flipped to accomplish that, but I was still short, like 30 grand, and so I was like what do I do? And that's how I ended up getting a partner.
Speaker 1:I found somebody that believed in me, had seen what I'd done and knew what I wanted to do, and took a chance on me, and that turned out to be really good for them. This person put $20,000 down on the first bet with me and it turned into a 30% stake in the business and as a return for them, they end up getting about. I think it was $95,000 in return when we sold the building and plus some rental income along the way. So for that case, it was a great solution for me, because all I needed was the money. I had the deal, I had the management, I had the expertise, so to speak. I don't know if I want to call it that, but I had a lot of the things that I needed to get the deal done, but the big one that I didn't have was money.
Speaker 1:And a lot of times that's what's going to happen to people is they need more money. They don't have enough, so they bring on a partner. Now, when you're bringing on a partner, there's a lot of things you want to consider, because once you do something let's say like a 50-50 split with a parent or the sibling or whatever a friend when you do that now, it changes the% of the work and only benefiting whatever your percentage is let's say, 50% in this case. So that could cause you to feel a little bit of animosity towards your partners when you don't feel like they're carrying their weight. And I know it seems trivial, but it can get lost when you're just in the focus of the deal oh my God, I got this deal, I want to get it done. So I'm just going to find anybody open the door and just grab whoever's out there and pull them in as a partner. That's dangerous, because you're going to be stuck with this person for as long as you have that property and, let's say, you buy multiple other properties with them. Now you're really entrenched in this with them and it may not be a partnership that you're okay with.
Speaker 1:For me, I think I'm okay with doing everything on my own. I actually prefer to be autonomous in the deals that I'm making and structuring, and I think it maybe slows me down because I don't have as much outside input or people that are in the know about what exactly it is I want to do or how to do it or all the specifics behind it. But in a way I think that's my superpower, because it allows me to move with our money as a collective, as if it's my own, and I feel a little bit more free to make deals that maybe are a little bit risky but pay off. Or maybe I take one loss but get five wins and you're never going to have anything. That's a perfect solution. But being able to do this all autonomously is really important for me. It gives me flexibility to make decisions on the fly, and sometimes that's the best thing to do in business, because business moves fast and sometimes you have to act quickly.
Speaker 1:But I laid that out with everybody. I told everybody this is what the plan is. This is my hope for the future. Maybe we achieve it, maybe we don't and also the timeline associated with this. Okay, are we planning on getting rich tomorrow? Are we planning on getting rich in the next 30 years?
Speaker 1:And for me, all my timelines are in 10, 20, 30, 40 year increments. I'm not thinking about tomorrow, really at all. I'm thinking all about what does 2035 look like? What does 2040 look like? That's the stuff that's important to me. So laying that out and saying, hey, I'm not flipping this property tomorrow. This property is going to stay in the portfolio for 5, 10, 15 years, and you need to be okay with that. When you put your money into the deal and say, okay, I'm not going to see anything potentially back for five years, and when I do, though, I'm going to get paid out pretty well. So laying that out in advance is really important, because if you don't do that, your partners are going to be not really sure what's happening, whether or not you guys are even succeeding.
Speaker 1:If you don't define what success even looks like, then how do you know if you're really achieving your goals? And I'm not a huge goal setter. I'm not sitting down writing down a list of goals every day that I want to accomplish. I don't do any of that, but I have an idea of what I want to accomplish and I know how to get there. I don't to me. It's hard for me to want to set goals because everything's arbitrary. There's 100 units. I want 100 units. That's why I've always wanted. But what does that even mean? It doesn't have any real true deep meaning it. I could have picked 101. I could have picked 92, like it doesn't matter. Same thing with the values of properties and things like that. And people get all hung up on these numbers that don't really matter.
Speaker 1:What I really care about is my quality of life increasing, and that is subjective, so it's really hard to put put a pinpoint on that. Is it getting a fancy car? Is it living in a fancy house? What does that really mean? I haven't really figured out how to define that and if any of you have any suggestions on how to define that, then let me know. But so I'm going in a flow like I'm just making good deals and I'm continuing to make good deals and stack those on top of each other, but I don't really have a metric to even tell you what a good deal is, necessarily because every deal is different. Everything is different. Basically, the way I look at it is if I made money, it was good. If I lost money, it was probably bad. And I lost money, it was probably bad, and I've done both.
Speaker 1:Anyways, that's a rant, but the idea is that you want your partnerships to be with people that are like-minded, have a similar mindset as far as timeline and what you expect to get out of the partnership, and then also laying out what is the expectation for each person, what they're going to do day in and day out, month by month, year by year, and that stuff could also change. You could revisit the partnership in five years and say, hey, this isn't really working for me the way I thought it was going to. Let's adjust a couple things to take some stress off me and put some stress on you and try to even it out a little bit, because you may not feel like you're going to feel any animosity towards your partners in the beginning, but you may feel that when you're cutting checks for everybody and you're like, what was everyone else doing when I was putting this all together? That's something you can figure out before you even enter a partnership.
Speaker 1:The next question would be like how do I vet a good partner? Is my mom, my sister, my friend a good partner? Who do I choose? And for me, the question has always been answered with friends, family, co-workers, which sounds like exactly the opposite of what most people would tell you to do. But who do I know closely? Who do I know closely? Who do I know that has decent finances? Who do I know that actually is going to show up to the deal and actually bring the money to the table? It's the people that I work with and that I live with and that I've grown up with. Those are the people that I trust.
Speaker 1:So I think it's crazy to just rule all those people out and say I'm only going to invest with somebody I don't know. So that way, if I lose all the money them, well, if you're doing that, you need to not you need to not get a partner at all. If you don't want to enter a deal with a friend, a family member or a coworker because you're so afraid the deal is going to fail, that it's going to ruin your relationship with them, then you should probably take a pause and say is this even a good deal for me to be buying at all. Maybe this is a bad deal and that's my first sign. Oh, I'm only going to invest with people I don't know is just crazy to me, because I would only ever want to invest with people that I do know, people that I know that have stable jobs, have good credit, are not a freaking pedophile or something crazy.
Speaker 1:I know these people aren't criminals. I know that they have a job. I know that they are interested in the same thing I am and they trust me with their money. I don't want somebody just off the street that's just going to throw me money because I have no vested interest in their success and they have real no vested interest in mine. They're just hoping that I'm going to be a cash machine for them.
Speaker 1:I know that can be challenging to think about, like approaching a family member or a friend or whatever with an idea for a business, whether it's real estate or not, but I think that's the place to start is. Those are the people that know you well. They're going to know whether or not you're somebody that they think they should invest in, and people make bad investments all the time. So, who knows, maybe you're not somebody that they should invest in and they still do it anyways but the idea is that they know you personally. You know them personally. You guys know whether or not you're aligned in your values and your beliefs for the future, and that's really important when you're making partnerships. Maybe you don't have friends, family or coworkers, maybe you don't have a watching this I don't have any of those things. Then you might have to go find somebody on the internet, go on Reddit and say I need an investor and bring $50,000 to this closing. You might find somebody I don't know. People spend money on all kinds of things in this world.
Speaker 1:The next question would be okay, I found myself a partner it's my mom and she said she's going to give me 10 grand to help me buy a du. You're going to want to set up an LLC or some sort of entity to join the two of you together, right? Because if you just buy it on your own, it's going to be in your name, it's going to be through your finances on your own, and then your mom's just going to hang her money out to dry and there's no real legal recourse for her if you mess the deal up in some way. So I would not do that. I would go and make an LLC, make a corporation, whatever it is that your accountant tells you to do. I'm not an accountant so I'm not going to give you accounting advice, but in most cases people make LLCs.
Speaker 1:I've made a bunch of LLCs that's what I usually do to join the partnership together and within that you're going to have a couple different things, but you're going to have the operating agreement. The operating agreement is basically your constitution how the LLC is going to operate, how it's going to behave, how money is distributed, how losses are distributed, how everything works within the LLC. Usually it's a couple pages long. Some of them are longer. I've had some that come through that are maybe 20, 30 pages long, where it gets really detailed, and most of that is for the future. Right, it's not so much what you're doing today. If you only have one duplex, there's not much to manage.
Speaker 1:But maybe that LLC down the road turns into being owned by a different LLC which is branched on with another LLC and before you know it, this is all working together and it's a massive portfolio. You want to make sure that it's all laid out pretty well, and so you're going to have that. You're going to have an EIN, which is kind of like your LLC's social security number, you can think of it. It's just a number that tags this LLC for tax purposes, and it's used oftentimes when you're getting loans and things like that. They can probably see all kinds of data about the LLC through that EIN. And then you're also going to have some filing with your local state or whatever, and that's one thing to think about too is filing fees and all that stuff in different states vary vastly. I only know Wisconsin pretty well, but I've heard some other states that have some insane fees for your refiling every year to make sure that the LLC is in good standing with the state and everything. But that's a side note.
Speaker 1:Something to think about, though. When you're making an LLC, it's not like a lot of people are like oh, it's 20 bucks, it's cost some money, like I think most of my LLCs probably cost about $400 to establish because I use a lawyer and but you could probably do it online for relatively cheap. Long story short, make some sort of entity that joins you and your partner together. Let's say, you're buying a 100-unit building with you and your partnership, but when you go to apply for this loan. Oftentimes, especially with credit unions and, honestly, with a lot of banks too, they're gonna take your information and they're gonna look into your backgrounds. Okay, does this person have a job? How long have they had this job? How much money did they make at their job? How much debt does this person have they to run? Everybody's credit in the partnership? And something to think about is okay, we're buying this really expensive property, but now I'm diversifying the risk across multiple people that all have their own income streams, and I would recommend that find partners that also have jobs, like you do, because that's going to help strengthen your approach to the bank and say, hey, all of us have jobs, all of us have good incomes, we have low debt, we have good credit scores, we are credit worthy borrowers and we want a loan.
Speaker 1:And oftentimes I think about going to the bank and getting a loan, like selling yourself in a job interview. You're trying to interview to get this loan. A lot of people think it's okay, I have the money, I have the property, I have the deal. It's not always that simple, especially in times where lending is tight. They're going to be looking at borrowers individually and they're betting on the horse as much as they're betting on the jockey and you're the jockey. So something to think about when you're coming to the bank and you're trying to get a loan, not just you and your partnership, but also the deal. Also all these things come together. Be careful when you're thinking about that stuff. If you have a brother who just got out of prison and is a felon and has never had a job and he's a drug addict, like maybe not the best partner, maybe a great partner, I don't know, but something to think about because you're gonna have to drag this person with you through the bank process and you're gonna have to get everything reviewed with them attached to all of this stuff. That's something to think about.
Speaker 1:Also, something to think about, too, is where are you in your phase of life with the partner that you chose or the partners that you chose? Are you having kids settling down? Are you just starting your career? Are you in the trenches of the prime of your career and you're very focused on that? Are they settling down? Are they potentially going to want to draw money because they want to go buy a house or a boat or whatever?
Speaker 1:If you have partners that aren't okay with sitting for the long term and your plan is a long term, then that might not be the best fit. And vice versa. If you want something short term, quick money, and they're really looking at long term stability, then maybe you guys aren't the best fit. Or at least try to align your values before you start buying properties, because that's going to really affect things. If your plan buying this duplex is that you're going to hold it for three or four or five years and they want to get out in six months, that could really jack up the whole plan and you might end up taking a loss when you really didn't need to. So a lot of things to say that finding a partner is really great to help kickstart your business, get you going faster, but also picking the right person is really important.
Speaker 1:If you pick a bad partner, it can ruin the whole thing before you even get off the ground and that can set you back maybe five, 10, 15 years, because you're at the infancy of this whole thing. If you mess it up at the beginning, you're going to be feeling the pain from that for a long time. In my case, I've made mistakes, but I didn't really make major mistakes until probably 30, 40, 50 units and in that case I can take a couple hits and we're going to be okay. It sucks. I don't want to lose money, I don't want to make bad bets, but I know that it's just part of the game and I'm going to try to do my best to mitigate that chance. That's, the chance will never be zero, though it's a probability game. Every now and then you can weather those things a lot better than at the beginning. That is why I would say that partnerships are a superpower.
Speaker 1:When you're starting out in the residential real estate game and this is a quick video, just talking about it Let me know what you think, appreciate anybody that's watched this all the way through or even partially through. Leave a comment, subscribe whatever you want. Let me know what I can do to do better and we'll talk to you soon, see you.