Thoughts on a three-way partnership?

[Codey Wendel]

Hello everyone. I am looking to purchase my first investment property next year and have two friends who are interested in investing with me. I have been thinking about forming a three-way partnership, but am not super familiar with partnerships or how they work. 

I'm fairly confident the set-up could work. I possess the most real estate knowledge (very minimal compared to the rest of BP), my one friend is a finance wizard and has a large amount of capital, and my other friend is an electrician and could handle some maintenance. Would love to hear your thoughts. Thank you in advance. 

[Charles Granja]

I don't know your friends, but I would be careful about partnering with people. Real estate can become stressful very quickly and alot of people throw in the towel (earlier than expected). If you buy a property and things don't go to plan, are your other friends going to pressure you to sell and take a loss on the asset 2 years after acquiring it? Are your friends going to be as involved as you?

To me, it sounds as though you might be doing all the work, and only receiving part of the return. It may be better since you are new to real estate to do deals on your own first, but it is only one house, and in the grand scheme of things, may be worth the risk. Economies of scale is a real thing in real estate. Three minds are better than one, so long as they have a similar vision. The problem with partnering is that all of you are new to real estate and don't necessarily know what you are walking into.