The 5-Step Framework for Investing in Real Estate with Your Spouse (or Partner)

0:00Ashley Kehr:Today, we're getting into one of the most common things we hear from rookies. It's not how do I find a deal or how do I get a loan, but how do I get my partner on the same page? We're going to give you a real framework for having this conversation the right way.

0:18Ashley Kehr:This is the Real Estate Rookie Podcast. I'm Ashley Kehr.

0:21Tony J. Robinson:And I'm Tony J. Robinson, who also invests with his spouse. So let's get into it.

0:26Ashley Kehr:So the first thing we want to bring up is why do partners even push back? And it may not be why you actually think. So we're going to go over three common reasons a partner would not be interested in investing in real estate with you. Okay. And when we talk about partners, we can talk about this could be your best friend that you want to invest with. This could be your spouse. This could be your significant other. This is, you know, somebody close to you that you want to invest with and it's important to you that they are on board. So in some scenarios, this could even be apparent that you want their approval.

1:01Ashley Kehr:You want them to be on board with what you're doing for whatever reason. Okay. But especially if you are in a relationship with someone, I do think it is very important for this person to be on board. And I want to clarify that because I had a conversation once with someone that came to, I think Tony or even there came to us and said, I need to get my wife on board. I think she would do such a good job managing the tenants and communicating with them. And she just, she doesn't want to do it. She doesn't see the vision that I have and things like that. I think the really important piece to this is your partner doesn't need to be involved.

1:42Ashley Kehr:They just need to give their support. And you could go off and do real estate without their support, but we're all about creating loving, you know, communicative, supportive relationships on this show. So you read our book, Real Estate Partnerships. You can find it on biggerpockets.com or Barnes & Noble or Amazon. Tony even references the five love languages because it does apply here into your real estate relationship.

2:10Tony J. Robinson:And one thing I'll add to that, Ash, is when I think about getting someone on board, there's really, I think, three layers to it. The bottom layer is they're just opposed to it. They're like, no. And I'm thinking more so about like a spouse in this situation where it's like your husband or your wife is like, hey, we're not doing this. Like I'm not okay with us investing money into this risky thing called real estate investing. I've seen too many TikToks about how that isn't the thing to do right now. So that's like the bottom layer where they're just like opposed to actually doing it. Then the next layer is that they're approving of it.

2:40Tony J. Robinson:They're like, hey, this makes a lot of sense. I can see the value in it, but I personally have no desire to do anything, right? Like, hey, Tony, go do your thing, but I'm going to sit back here and I'm going to do my own thing over here, but I support you. And then the final, and not even maybe the final, because you don't necessarily have to graduate, but then I guess the next level would be like, not only are they supportive, but they also want to be involved. And I think where a lot of rookies get, where they get stuck, it's like, obviously it's easy if they're at that bottom level of like, hey, my spouse just doesn't even want me to do this?

3:10Tony J. Robinson:How do you start having some of those conversations to get them to that second level? But sometimes it's, it's understanding that being at that second level of them just being supportive, not involved, that's totally fine. Because if it's not their thing, don't make it their thing, right? Like, like let their thing be supporting you and your thing be actually doing the real estate. So it's just important for Ricky to understand there are different levels to what being on board actually looks like.

3:32Ashley Kehr:So a couple of things before you actually sit down with your spouse is you need to kind of have a game plan and think about how you're going to approach this and what you're going to say and not just like telling them we're going to invest in real estate. I'm taking all the money out of our savings and we're buying a duplex. Like that would be exciting to me. That would be exciting to Tony. But for somebody who's not heard of the realm of real estate, it may take some time to actually approach them about this idea. And it shouldn't be pushed. It shouldn't be shoved. It should just let the person think with it because it is a scary thing.

4:07Ashley Kehr:It is risk. And it is, especially if you have your finances tied together, it is very much their money. But also, I want you to think about it's not only money that it takes to invest in real estate. It also takes time. So this means time away from your family, that you're analyzing deals, that you're going and walking properties, that maybe you're managing tenants, maybe you're going to be the the handyman on their property and do your own maintenance or repairs. And that's you going over to make a repair on a Saturday afternoon. And it ends up being your kid's birthday party that day. Okay. So there are more things that come with real estate investing rather than just the numbers.

4:50Ashley Kehr:And I think, or just the capital. And I think those are some of the negatives that I said that can happen is that taking time away. But also I think it's very important that when you're sitting down. You talk with your spouse about, you know, what would be their specific concern? Is it the financial commitment? Is it the time commitment? But I think you also need to go in and ask them what they want out of life. What do they like? What don't they like about their finances right now, their life right now, the lifestyle you live? What would they want different? What do they dream about? What goals do they have?

5:29Ashley Kehr:And then try and take that information and build that into here's how I can get that dream life for you with real estate. And I think the more that you can put this in writing, maybe it's drawing it all out as a diagram. Maybe it's running the numbers using the BiggerPockets deal calculator, printing out the analysis to show them. But I really think the very first important step is to include them into the conversation of what they want out of life and work backwards. We always say that to investors. You want this, work a plan backwards and figure out what's the first step you need to take. Don't think, oh, the first step I need to take is I need to buy a house.

6:19Ashley Kehr:Why do you want to buy that house? What are you going to do with that house? What's your strategy? And your strategy all depends on the future. What do you want your life to look like? What do you like to do? What do you want out of this? Then we can tell you what type of property to buy, what strategy you should be doing. So I would start the conversation that way of talking about your life, what you want out of it.

6:41Tony J. Robinson:I think another big piece too, Ash, is understanding the worst case scenario and being able to talk to like, man, if things just go absolutely terribly wrong, what does that actually look like for us? Because let's say that you guys have a hundred grand that you want to invest. And aside from that a hundred grand, you still have your emergency savings. You're still saving for retirement. Like, like that's just like extra money that you guys have. And you kind of walk through it. Okay. Well, the absolute worst case scenario here is that we maybe invest some of this capital. Like, Hey, let's not even invest all of it.

7:15Tony J. Robinson:Maybe we invest half of it. So we take 50 ,000 bucks and we go use that to try and buy a property somewhere. And if it doesn't work, then maybe the worst case scenario is that we own this property for a year or two. We hate the experience or it doesn't make as much money as we want. We have to sell it maybe at a loss. And we lose 50 grand, 60 grand, however much. Are we okay with that scenario? And if the answer is yes, well then, okay, cool. Then we know what the worst case scenario is and we can move forward with some confidence that we've already planned and prepared for that. And if the answer is no, well, then how do you adjust whatever your plan is so that you can live with that worst case scenario?

7:54Tony J. Robinson:Maybe instead of investing 50 grand, maybe like, okay, I feel okay with 30 grand. Like if we can cut our losses at no more than 30 grand, I feel okay with that. Okay, great. Well, then there's the benchmark that we need to move toward. So I think just thinking through the worst case scenario is important as well.

8:09Ashley Kehr:Coming up, we're going to go the actual conversation framework, what to say, when to say it, and how to bring your partner along without pressure or ultimatums. We'll be right back after this.

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11:00Tony J. Robinson:So visit costsegregationguys.com slash BP for your free proposal and find out how much you could save this tax season. All right, guys, welcome back. So we're going to get into a five-step framework for actually having this conversation. Like, what are the five elements that we should really focus on as we think about how do we present this crazy idea of investing in real estate to our partners? So the first step, and we talked about this a little bit before the break, but it's to start with your shared goals, not necessarily your investing strategy. You have to remember that you've been the person who's probably been consuming all the content about real estate investing.

11:35Tony J. Robinson:And you've been watching the podcast and the books and the meetups and whatever it is. So you know what Burr means, you know, fix and flip, you know, house hacking, you know, co-living, your spouse, your partner doesn't know any of those things. So they're not going to necessarily be excited by the niche that you've chosen. What's more exciting to them is to say, you know, hey, babe, we've been spending X amount every single year in taxes. And I think if we buy this short term rental, there's this little strategy called the short term rental tax loophole, which might allow us to not only have this property in this vacation place that we've always wanted, but we'll also get a really big tax refund that next year, which lo and behold, will then allow us to buy another short term rental, and then we'll get another tax refund.

12:18Tony J. Robinson:And then we can buy another one. And five years from now, we could have five properties in five places that we love going, that they're all cash flow positive that have all produced this big tax benefit for us. What is that? How do you feel about hearing that? That's a very different strategy than saying, babe, you won't believe all the research I've been doing on ADRs and occupancies and regulatory risks in all these different markets. And I think I might've found a good deal. Those are the, it's like sales 101. You want to sell the benefits of what you're talking about and not the features of what you're talking about.

12:48Tony J. Robinson:So that's the first piece. Tie it to your goals, not necessarily the investing strategy.

12:52Ashley Kehr:Okay, so the next thing is to implement. Number two, step two, is to connect real estate investing into how it can actually reach their goals. So for example, if they want a better life and you can explain to them that why maybe just not investing into your retirement with your 401k is going to give them those changes that they want immediately, how can buying a duplex and what can happen within the next five years, 10 years, instead of waiting until the age of retirement for the retirements that you've been saving for. Show them the difference of different investing options and how maybe doing different strategies, like Tony mentioned, the short-term rentals as to, you know, you have a vacation home you can go to one or two times a year, plus you're saving in taxes doing the short-term rental loophole.

13:41Ashley Kehr:Or if you did a long-term rental. Here are the benefits you could get from this and you could get some cash flow and things like that. So maybe not even like pressuring on here's the strategy we should be doing, but laying out the different options so they can see that, you know, it's not, oh, if we buy a long-term rental, that means that's the only investing we're going to be able to do. Real estate has many different realms to them and different ways to actually invest in real estate and different strategies.

14:10Tony J. Robinson:And then step number three, which we've talked about a bit already as well, but it's to address the worst case scenario out loud before they bring it up. You know, I've been fortunate enough, both as an entrepreneur and as a W2 employee to conduct interviews to potentially hire people. And one of my favorite questions to ask is, what is your weakness? And I always preface this when I ask this question of like, hey, don't, don't give me like an interview answer where it's like, hey, my weakness is that I'm a perfectionist, or my weakness is that I work too hard. Like those aren't real weaknesses.

14:38Tony J. Robinson:I want to know what your actual weakness is. Because if I can meet someone who's self-aware enough to know what their weaknesses are, that's also someone who hopefully has figured out how to mitigate those weaknesses. And that is so much more important to me than just the person who's trying to hide and pretend like they don't have any weaknesses. So it's the same thing when you present this to your partner, to your spouse, don't try and just fool them that everything's going to be perfect because there is risk in real estate investing. That is true. And it's better that you can show them that you've identified what those risks are, as well as the ways to mitigate those risks, because that's how you actually build confidence in your spouse that you've actually thought through this in a full and meaningful way.

15:15Ashley Kehr:And step number four is giving them a role or making them feel involved if they choose to be. Okay. So, you know, maybe somebody wants to be active and wants to be a part of this. You know, if they want this to be an open book, open the book, show them what you're doing, show them where the money is coming from for the capital, show them what you're doing during the process how you're analyzing the deal. This could definitely make your partner feel more comfortable with them seeing everything that's going on instead of it just being like closed doors, like, don't worry, I'll take care of it. We're going to buy a house and I'll rent it out.

15:51Ashley Kehr:I'll take care of everything. And not seeing the actual transaction, seeing how the deals analyze, things like that. Maybe it would make them, depending on the type of person they are, more comfortable to be involved in some aspect or role of it.

16:04Tony J. Robinson:And then step number five is to propose a small first step. Don't ask them to jump in with both feet on day one, but just a small baby step. And I personally think that one of the best first steps that you can take with your spouse is taking them to a place where other investors are getting together. You can go to a local meetup, maybe take them to a one-day workshop, take them to a conference, take them to BP Con, because it's one thing if they're hearing it from you about why real estate investing is a great idea. It's a different thing if they're standing in a room full of people who've already done it.

16:39Tony J. Robinson:And those people can speak to like, here's how my life has changed because I made this decision to do X, Y, and Z. So I think a great small first step is just getting them to network with other folks who've already done it and let those people kind of be your advocates as well.

16:53Ashley Kehr:Or if you're both readers, buy one of the many BiggerPockets books and read it at the same time and kind of, you know, look over, see what part they're at, see what they're thinking, and have a little mini book club together. But another thing I really think is important when you're having this conversation for this five-step framework is the setting. While one of you is cooking dinner, the other one is packing lunches for school, the kids are running around, it's night, you're tired, you want to get the kids to bed, you're ready for bed yourself. That is not the time or place to have this conversation.

17:27Ashley Kehr:So this should be a quiet time, just the two of you. It shouldn't be when you have five minutes and you got to be out the door, maybe not even riding in the car. It should be sitting down. Maybe you go out to dinner and you have this discussion at dinner. You make yourself a dinner at home or you plan that you are going to have a couple hours at home without the kids. You're not going to be doing laundry. You're not going to be doing the dishes. You're going to sit down and have this discussion together. So I think when and where you have the discussion also plays a role in how you handle this framework.

18:00Tony J. Robinson:I just want to add one last thing. Like what happens if your partner does say no? Like if you go through all these five steps and they still say no. I think the first thing, and this is, I think, hard for some people to hear, but you maybe have to do some self-reflection and understand, have you actually earned a yes from your partner yet? Have you actually earned a yes from your spouse yet? Because if you're someone who maybe throughout the majority of their adult life has struggled with consistency, you're someone who's struggled with discipline, you're someone who's struggled with actually seeing things through, then your partner or your spouse actually has a pretty strong argument as to why maybe you shouldn't invest in real estate and you shouldn't take a big part of what you guys have saved up financially and put this into this thing that maybe a week from now you're going to lose interest in.

18:49Tony J. Robinson:So part of it is proving to your partner, to your spouse, that you've actually earned the right to present this opportunity to them.

18:56Ashley Kehr:I always think of the movie The Founder with the guy from McDonald's, Ray, is that his name? And how his wife was getting mad because he'd be out selling different things and he was doing the milkshake machines. And it was always one thing after another and trying to get out there. But I think if your spouse does say no or a significant other, clarify why. Like what is their biggest fear and kind of go back to that and then maybe reassess the situation. You know, give it some time. Don't harp. Don't nag. But maybe do a little more research, figure out different ways that you can make them more comfortable with this idea.

19:34Ashley Kehr:And, you know, be riding in the car and be listening to your Real Estate Rookie podcast and let it go in one year. Maybe it goes out the other, but at least, you know, it might trigger that aha moment. Um, we all have them. A lot of people had those for real estate, that aha moment. I can remember mine. I was sitting in an attorney's office. There was an orange shag rod. There was wood paneling on the walls. And that was my aha moment during that time as to, wow, this is what real estate can do for someone. It wasn't for me at that time. It was for someone else, but it was like, wow, I need to do this.