Business mogul and American icon, Andrew Carnegie, is famous for saying that 90% of millionaires got their wealth by investing in real estate. As Carnegie built his steel empire, real estate was, indeed, a crucial component of his success. What many don’t know is that Carnegie had another secret wealth weapon: strategic partnerships. Even though Carnegie, a friendly, likable gentleman, was often the welcoming face of his empire, he kept a tight network of partners, and it’s these relationships that propelled his fortune to the next level.
Today, real estate investors can follow in Andrew Carnegie’s footsteps if they invest not just in land and buildings but in connecting with strategic partners. Here are four types of partnerships that can help give investors a competitive edge.
Although you often need lenders’ money, it’s important to remember that they need yours, too. Every loan you agree to has an interest rate and closing costs that generate income — and this helps each lender chip away at their yearly earnings goals.
To be a better partner to lenders, you can try the following:
Convey that you’re open to helping them get troublesome properties, such as foreclosures, off their hands.
Let them know ahead of time your investment plans in specific areas. That can keep you top-of-mind if they come across a compelling deal.
Openly communicate your portfolio strategy. Let them know how much of your portfolio you want to allocate to foreclosures, flipping, rentals, land or commercial real estate. If your strategy changes, give them a heads up. This way, they know how to best use your business to meet their goals.
In addition to property managers’ extensive knowledge regarding maintaining rentals and keeping tenants happy, they often have the inside scoop on unseen investment opportunities. For example, if an owner’s overhead is too high and they’re running into trouble, the property manager may be able to give you a heads up months before they put the place up for sale. Property managers also know the rental rates of different areas, as well as how quickly units tend to go from vacant to occupied.
Contractors thrive off consistent work. Often, they may be willing to cut you a deal if you provide a steady stream of work for them and their team. With a contractor as a strategic partner, you can include more fixer-uppers and complete-rehab properties in your portfolio. A contractor is a dedicated professional ready to help you capitalize on the hidden potential of undervalued homes.
If you own rental units, local businesses can help you offer tenants little perks that make them feel more welcome and comfortable in the community. Consider connecting with the following types of businesses:
Restaurants: Many may agree to offer your tenants special deals from time to time. This helps them drum up more business by increasing awareness within the local area.
Boutique shops: Boutiques in your area may be open to one-day or weekend sales for your tenants. They can go in with a coupon and shop to their heart’s content — and the boutique’s delight.
Your tenants will love the cool savings and specialized treatment, and the business owners will appreciate the boost in patronage.
Andrew Carnegie’s fortune was based on an essential truth: Strategic partnerships can help make the greater business ecosystem work in your favor. Whether you want to expand your operation or firm up your current investments, the right partnerships all result in the same thing: more productive, profitable opportunities.