To Partner or Not To Partner

To Partner or Not To Partner

Greensboro, NC · Member since 2016 · 20 posts · 1 vote

I am about to begin investing and have 1-3 other people who I am considering partnering with. My question is how could we form a beneficial partnership? The only way I can think of is to invest capital as ownership % and split profit that way. We could always advise and mentor each other etc but that doesn't warrant profit sharing. Then if I find a deal and the other person finds a deal how then do we split that up? If I put all the hard work you haven't earned an even split. A CPA mentioned having a partnered management company with separate property ownership companies. I plan on outsourcing most if not all services so I don't see how that would work either. In what way could 2-4 individuals form a REI investing ckmonay and give an equal amount of work in order to split profits evenly?

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  • Abel CurielBusiness Member
    Real Estate Agent · Queens, NY · Member since 2016 · 2k+ posts · 1k+ votes
    9y

    Good Morning DeMarcus,

    I'm not sure how about the legality of partnerships in NC but I have 1 business partner so I can speak from my experience. You bring up valid points with regards to profit sharing and fair compensation for work load. Our CPA set up our LLC and it was pretty straight-forward as we agreed to split everything down the middle.

    The same can be done in your situation if you are working with people you trust. If you have any suspicion that some people wont work as hard as others, don't partner up. Having clearly defined roles (i.e. one person is the fundraiser, one person focuses on marketing, one person builds the support team, one person does book keeping and budgeting) is something that can help keep partners working towards the common goal without stepping on each other's goals. The problem with this is that someone has to pick up the slack if a partner is underperforming.

    I think reaching out to a local attorney can shed more light on this topic.

    Best of luck to you!

    -Abel

    REbuild Team - eXp Realty5234 Reviews
  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    9y

    Before you go into this, you have to answer one question, of which there are only 3 correct answers.  If each potential partner can answer the question with one of these "exclusively correct" answer, you will have your answer to your  question above.  If any of your potential partners answers to this one question is NOT one of the "Exclusively Correct" answer, then there is no reason (but a bad one) for them to be your partner.

    Here's the question:

    Q:  "Why are they going to be your partner?"

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