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Recently on our podcast, Ryan shared one of his biggest mistakes when he first started wholesaling real estate back in 2019. This is for anyone who doesn't think they have the skills or confidence to quit their job and increase their income through real estate investing. You may be considering getting a partner to help you, which is what Ryan did at first. But after doing over 400 deals, Ryan really wished he hadn't started with a partner. Instead, he wishes he had used joint venture agreements to split profits when needed, rather than being tied to a partner long-term when one person inevitably works harder than the other.
Let's dive into how it unfolded.
How It All Began
It started when Ryan signed up for a 30-day real estate wholesaling challenge hosted by Max Maxwell. His wife Megan found it through someone she followed on social media who was a real estate wholesaler and had left their 9-to-5 job.
At the time, his day job was on very shaky ground. He had a baby on the way and he needed to find a way out. Wholesaling real estate seemed like the perfect option.
He reached out to the acquaintance Megan found who was already wholesaling. Ryan told him that he had started the 30-day challenge and asked if he could bounce ideas off of him along the way.
Getting His First Deal
Within just 14 days, Ryan had my first wholesale deal locked up, thanks to a lead from someone at his church. But despite getting a deal so quickly, he doubted his own abilities.
Ryan assumed he needed help, so he offered his acquaintance a 50/50 split if he would walk him through the first deal. The aquaintence agreed.
They negotiated with the seller together and put the property under contract for $16,000 below market value. Then they found a buyer and assigned the contract for a quick profit.
After splitting the profits 50/50, they each earned $8,500.
Ryan felt so accomplished! He had done his first deal and proven he could make this work.
"After getting that first deal done, wholesaling seemed easy. So we agreed to continue working together, with me finding more deals and him helping me market and close them. We'd simply split all profits 50/50 moving forward."
In hindsight, this was a mistake!
The Problem Unfolds
With his acquaintance's help, Ryan continued assigning more deals over the next couple of months.
- Deal #1: $8,500 profit
- Deal #2: $10,000 profit
- Deal #3: $10,000 profit
After 60 days, he had made $28,500 in profits, equal to his full-time salary!
But over time, he was doing more and more of the work - marketing to real estate leads, contacting sellers, evaluating properties, finding real estate buyers - while splitting profits 50/50.
Ryan wasn't accounting for his time or expenses either. And he started to feel taken advantage of.
Deals would stall because his partner was slow to respond when he needed help. But they had this loose verbal agreement to split profits no matter what.
The Better Option: JV Agreements
Looking back, Ryan said he should have used joint venture (JV) agreements instead of a general partnership.
Here’s the difference:
- A partnership means you split all profits on any & all deals
- A JV means you split profits on one specific deal if your partner brings value
For example, on his first deal he could have sourced and contracted it solo, then done a JV agreement where his acquaintance marketed it to find a buyer. They would have agreed to split just that one wholesale fee 50/50 since he brought a buyer. No long-term strings attached!
Ryan just didn’t know about JV agreements at the time.
How It Played Out
Ryan eventually got tired of feeling taken advantage of, while also not fully understanding the entire real estate wholesaling process.
Ryan told his partner he wanted to do one deal completely solo, just to prove he could.
He found a deal, got it under contract, found a buyer, and ultimately earned only $2,000 due to some legal fees he didn't expect. Still, Ryan was glad he did it all himself to understand the full process before involving a partner again.
The problem is when he tried doing a JV agreement with someone else on his next deal, he still didn’t structure it properly. They had a verbal agreement to split profits instead of signing an actual contract with clear terms.
Long story short: More communication issues came up and he accidentally paid the partner less than he promised due to unexpected fees, damaging their business relationship.
What Ryan Learned
Doing over 400 deals since then has shown him:
- He CAN do this business entirely solo
- He doesn’t actually need a long-term partner
- JV agreements ARE very useful
JV contracts let you legally split profits on one-off deals when bringing on a partner makes strategic sense. Just don’t commit yourself to splitting profits on any & all deals with a partner unless terms and roles are abundantly clear.
“After that first partnership dissolved, I went on to do hundreds more deals completely solo, gaining confidence & knowledge along the way.”
Here’s Ryan's gift to you - get the free JV agreement he still uses to this day so you don't repeat his mistakes!