Breaking Down Deal Structure and Partner Selection

Starting From Scratch: The Role of a Balance Sheet Partner
When you're just starting out, banks might not look favorably at your financial profile. You may have great credit, but if you lack sufficient income or assets, securing funding for large deals can be nearly impossible. This is where a balance sheet partner steps in.

What is a Balance Sheet Partner?
A balance sheet partner is an investor with strong financial credentials—assets, a stable W-2 job, and good credit. Banks view them as low-risk, which allows you to secure funding.

In the beginning, my wife Laura and I brought on such a partner to get our first flips and rentals off the ground. We traded equity in exchange for their financial backing. While it meant giving away a portion of the profits, it allowed us to establish our business and gain experience.

When to Bring on a Partner
There are three key situations where partnering with a balance sheet investor makes sense:

Starting From Zero:
If you’re new, with no assets or significant income, a balance sheet partner can help you secure funding for your first big deal.

Building Credibility in a New Niche:
When we transitioned from flips and rentals to assisted living, our prior experience wasn’t directly applicable. Despite flipping nearly 200 homes, we still needed to prove our credibility in the new niche. Partnering with someone with stronger financials or experience helped bridge the gap.

Scaling Up:
Even if you have a steady income and assets, a partner can help you scale faster by leveraging their financial standing.

Final Thoughts
​Bringing on a balance sheet partner isn’t about giving up control; it’s about gaining the leverage to take your business to the next level. Sure, you might give up more equity on your first deal than you’d like, but it’s a stepping stone. With time, experience, and growth, you can adjust your deal structures and achieve financial freedom.