Part-Time RE Investing: Adding a 3rd Partner

[Greg Johnson]

Hello,

I'd like to hear folks' opinions on adding a third business partner into the mix for part time RE investors.

About a year ago, my brother and I bought our first property (multi-family) held in an LLC that we each own 50% of. Having had a great first year, we've decided to pursue additional properties and grow our buy-and-hold landlording business.

At this point, we've reached a crossroads: we're discussing the cost/benefit of adding a new partner.

It seems that if we add a third partner, we benefit from additional capital contribution, reduced personal risk, fresh ideas, and a quicker time to creating a self-sufficient business (i.e., having business profits fund new properties). The most significant drawback is the management "cost": three approvals instead of two on all decisions and the resulting increased time required - we both have full time jobs and we really enjoy the flexibility that a two-person partnership offers (e.g., text message decision making). I'm having difficulty assessing if the quantitative financial benefit (faster growth, but with ownership dilution) exceeds the qualitative management cost.

Has anyone gone through a similar experience? How did/would you make such a decision? Appreciate any insights!