All partnerships end. But it is up to you whether you want it to end on a good note or not.
Even though you are partnering up with your family members or a friend, there is a high possibility of your partnership ending on a bitter note. I hope this never happens to you but there’s no guaranteeing that your partnership will go smooth. But once things go sideways, there’s no turning back. However, there is something you can do to ensure things between you and your partner don’t turn out to be a disaster from the very beginning.
I am talking about ensuring the Nash Equilibrium – this is the secret of surviving and thriving in a real estate partnership.
Before you ask what Nash Equilibrium is, let me explain.
When both sides of an equation, that is, you and your partner take the best decision based on your belief of each other’s effort, you achieve a Nash Equilibrium state.
To be in a Nash Equilibrium, you and your partner need to check some boxes and follow these steps.
- You and your partner need to know what each of you is bringing to the table.
- You and your partner need to have full confidence in each other.
- You and your partner must take the executive decision considering each other’s best interest.
- You and your partner’s future approach to rental properties should be compatible with the current state of equilibrium.
Step 1: Know what each of you is bringing to the table
First of all, to be in the Nash Equilibrium, you and your partner both need to know what each of you is bringing into the table. If you are good with connections and finding tenants for your rental tell that to your partner. Let them know what value you are bringing to the partnership. In return, he will tell you what he excels in. At the end of the day, you and your partner will come up with an arrangement where both of you will sort your responsibilities between yourselves.
Step 2: Have your faith in each other
The next step to ensure you are in the Nash equilibrium is having confidence in your partner. Since you already know what each of you is contributing to the partnership, I wouldn’t be wrong if I assume you know the extent of your partner’s expertise on his responsibilities. Now, it’s time to put your faith on each other.
Step 3: Take the executive decision considering each other’s best interest
Next step is to make the decisions based on each other’s best interest. This is the most important step because this is how to be in the Nash Equilibrium.
Before you make any decisions, think of the best interest of your partner and have faith in the fact that he is doing his best to contribute to the partnership. This is how you both make the best decisions.
Step 4: Both of your approaches should be compatible with the current state of equilibrium
This is self-explanatory. Once you and your real estate partner reach to the Nash Equilibrium, you need to make sure your future approaches are on par with the equilibrium so that your partnership ends on a good note.
