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Real Estate Investing Partnerships: How To Get Them Right

Published on Tuesday - July 16, 2013

Is it possible to establish real estate investing partnerships that last and maximize potential?

Partnerships go hand in hand with real estate investing. It’s completely feasible to start without them and grow a successful real estate investment business or portfolio. However, those that want to go big and grow fast will find them virtually impossible to neglect. Whether it is raising funds, bringing on an expert opinion or collaborating to leverage a bigger audience, real estate investing partnerships offer a myriad of benefits.

Still, real estate investing partnerships have been notorious for being a delicate and often treacherous tightrope walk, balancing between pleasure and pain. In fact, you could say issues are inevitable unless preemptively dealt with.

On the bright side, there is plenty that can be done to minimize the risks and make them more profitable.

It all starts with screening and testing. It doesn’t matter if you have known the other party since birth or are married to them. People invariably change, especially after getting into business together. Any concerns upfront should be seen as major red flags and addressed before inking an agreement. Take it slow, test the waters, work into it slowly.

Take time to really layout the ground rules, define roles and make sure everyone is on the same page.

Next, recognize that everyone tends to be a little selfish at some point or feel that they are doing more than their fair share. Accept that there will be ups and downs, but those can be ridden out if each party is willing to commit 100%.

Even if things are going great in your real estate investing partnership, know that people often change life directions and priorities. Take the time to lay out a map for a graceful exit before going in so that there won’t be any destructive blow ups later on.

Finally, it is smart to consult an attorney early in case a graceful exit isn’t achievable. Formulate an action plan for the worst case scenario.

Provided you stick to these rules, you shouldn’t have anything to fear from jumping into a real estate investing partnership. Not only will the partnership succeed, but productivity will likely increase and margins grow.

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