As a real estate investor, the thing I get asked the most is tips on Real Estate partnerships. I know where it is coming from. We see lots of failed real estate partnerships around us. That’s why new investors often get concerned about their newly formed real estate alliance.
Well, here are some tips for them.
1. Transparency and clarity of you being in a real estate partnership
The very thing to ensure in any type of business involvement is transparency. You cannot lie to yourself and be in a deal or partnership where the absence of you or any other party won’t affect the outcome. You need to ask yourself why aren’t you going solo.
Find the reason why you got involved. Is it a capital issue? You could just borrow the money from your friends and family. Are you struggling with your time management and workload? You could just hire a real estate assistant. So, why are you taking a real estate partner into the deal? You must know the reason for your and other party’s involvement.
2. Be wise in the partner selection
You don’t want a partner who promises you a lot and delivers only a little. This is not a quality that someone would appreciate.
So, before you move any further, make sure what the other party is promising is legit. If needed, ask for references that will back his claims to be a good partner and a hard-working person.
See his portfolio carefully. Notice the small details, it will help you determine whether he is as organized as he says or not. Ask about the previous instances where they dealt with similar partnerships and deals. Also, if you are asking them those questions, it is only fair you are prepared yourself to answer the questions.
3. Get everything on paper
Hope for the best and prepare for the worst.
What if your partner tries to take advantage of your terms? What if he tries to manipulate the partnership with you?
It’s better to be safe than sorry, right?
To ensure such unfortunate things don’t happen to your partnership, it’s better to have everything on paper, just so there is no option for manipulation, even if your partner tries. Besides, having the terms written on paper gives you legal back up to fight any actions that go against your agreement.
4. Clarify your strength & weakness and vice versa
Besides being transparent to yourself, you need to make sure both you and your partner are transparent about your strengths and weaknesses to each other.
Tell your partner what you excel at. Tell him what you don’t have any experience with or what you don’t like to do. Ask him the same. Ask him what his strengths are, what is it that he is most comfortable with and what are situations that he won’t be comfortable to tackle. This way, you can distribute your responsibilities amongst yourselves to avoid any complications in the future.
