I’m looking to purchase my first property. I proposed the idea to my father and he likes the idea. My dad and I have a modest amount of money to get started. I’m very nervous about getting into money and business with my dad. Is this a bad idea? I feel like I should answer to him bc he’s my father. But, I’m the one with business experience. (I operate a restaurant)
It all depends on the type of person your father is and how good of a relationship you two have.
If he has the following qualities then I would suggest not going any further with him
1. An overbearing stick in the mud
2. General dictator, you do as I say, You are wrong, I am right
3. Lackadaisical, you will be doing most of the grunt work
4. Passive aggressive
5. Any other personality that you are not fond of
Altogether, if you have to come to biggerpockets to ask if you should go into business with your father then shouldn't that be a sign that maybe you shouldn't? You are asking complete strangers to make a judgment call about someone you have known your whole life. If he is a business savvy go getter then I am pretty sure you wouldn't have thought twice about doing business with him.
There is nothing wrong with going solo. Make your own path. Sometimes its better to not have family involved with business. Muddies the water.
Investor · Tampa, FL · Member since 2017 · 123 posts · 109 votes
7y
You will likely get mixed replies here, but I personally would not go in business with a family member. After doing research and polling those more experienced than me, even going half on a deal with a friend isnt a great idea.
New to Real Estate · Waukesha · Member since 2019 · 96 posts · 43 votes
7y
If you work together i would have clear rules.Also how you want things to go and see if your on the same page. Then what does he bring to the table if its almost the same as you then not really worth it.
It all depends on the type of person your father is and how good of a relationship you two have.
If he has the following qualities then I would suggest not going any further with him
1. An overbearing stick in the mud
2. General dictator, you do as I say, You are wrong, I am right
3. Lackadaisical, you will be doing most of the grunt work
4. Passive aggressive
5. Any other personality that you are not fond of
Altogether, if you have to come to biggerpockets to ask if you should go into business with your father then shouldn't that be a sign that maybe you shouldn't? You are asking complete strangers to make a judgment call about someone you have known your whole life. If he is a business savvy go getter then I am pretty sure you wouldn't have thought twice about doing business with him.
There is nothing wrong with going solo. Make your own path. Sometimes its better to not have family involved with business. Muddies the water.
Rental Property Investor · Ithaca, NY · Member since 2015 · 1k+ posts · 1k+ votes
7y
@Nick Farrell
Could he be a silent partner without much rule about what you do? I asked my parents for money to get started but never asked them to join me. My brother wants to work along side of me and I think the idea isn’t the best. Remember what Biggie Smalls says “keep your family and business completely separated”
If you need to use your dads money to get started make it official. Either way make him a silent partner or LP or something else. Whether you give him a % of the monthly income or just pay him back at a set interest rate. I have no problem using other people’s money but in the end the deal is mine to make or break.
I’d rather give up the first X years of cash flow to a private money lender (I.e. your dad) for the down payment then get into a fight over thanksgiving dinner about how to run my rental business.
I have a relative that had numerous rentals and commercial real estate throughout his working life and not once had I ever hear about it. I’m sure if I had known something when I was younger I could of learned something but he separated family from business and it worked amazing for him. Family is family and business is business crossing those is like crossing the streams in ghostbusters.
Investor · Milwaukee, WI · Member since 2013 · 1k+ posts · 1k+ votes
7y
I think it is 100% contingent on the maturity level of the people involved. I think this goes for any business partner.
Complete strangers go into business all the time. How? Good written contracts.
Treat it like a business, and it will be a business. Treat it like a hobby, and it will be a hobby.
Going into Real Estate business, is not like another business. Are you starting a brokerage? A property management company? Those are more like a traditional business. Or, like most of us, are you seeking to be a deal by deal investor? Deal by deal investors are only in business with others as long as they hold property together.
I think you would be a damn fool to walk away from a chance to go into business with your own father. What a golden opportunity so many of us never have. If it fails, it fails - so what. Will you argue? Probably. Most business partners do. Are you (both of you) mature enough to handle a conflict with another person and come out ok on the other side? Or do you hide in the corner until your bad wittle feewings subside???
When I was 20 I started a business with my brother. It was great. It was also hard. The hard part was I was not mature enough to see that our differences were something that simply needed to be worked out. So, after some time, I left the business because I thought our visions were too different. I've always regretted that. I would much rather spend the enormous amount of time a business takes with family than I would with a stranger, or alone.
I’m looking to purchase my first property. I proposed the idea to my father and he likes the idea. My dad and I have a modest amount of money to get started. I’m very nervous about getting into money and business with my dad. Is this a bad idea? I feel like I should answer to him bc he’s my father. But, I’m the one with business experience. (I operate a restaurant)
Anyone else start this way? Reach out!
-Nick
A tip for this is that you and your father must both be able to be business partners, not exclusively father and son. Both of you need to see each other like you see all other people. You say you should answer to him as a father. Well, are you an adult or not? Your dad might want to treat you like a child and again, are you an adult or not? You will need to sort that out. But think about this, if you can't sort that out, how will you sort any other differences out??? All partners have differences that need sorting out.
I said it in another post and will say it again, I think you should jump on this golden opportunity to share your life with your family. If it fails it fails. That does not mean your RE business will fail with it. I've been trying to woo my wife for years. I mean, what a great way to go through life thinking I spend too much time with family - lol!!! So much better than getting to the end and wishing we had found more time together.
The great part about life, is you get to decide what it looks like (mostly).
Investor · Bayside, NY · Member since 2017 · 1k+ posts · 1k+ votes
7y
I've done it with my mother in law and it turned out great. It could be fantastic.
In 1982, I was relocating, had a SFR and was going to sell my home and buy another SFR. She interceded, says she'll kick in $50K if we bought a multi, at the time, a duplex or a 3plex. We wound up picking up a 3 plex living in one unit. Deal is 50/50 though she put all the cash in. We did all the managing and repairs, improvements. She was an excellent silent partner.
A year later, with the sale of my SFR, I was going to buy another multi with my $50K. She interceded again, and says she'll kick in another $50K into it so it will cash flow much better. It did, and she became a silent partner again.
Why did we do it? She's retired, her husband passed away, had a few hundred thousand cash laying around. She collected his life insurance, and collected on an insurance settlement. They were extremely frugal besides. My wife and I had excellent W2 jobs. She couldn't do it alone, neither could we.
She did two properties with us, two others with her son, and one later with her other daughter. We started in the 80's, and with her cash, my wife and siblings bought 6 properties including a 3plex she lived in herself. Later on, with her estate planning, she gifted over her portion. With investments in NYC and San Francisco, appreciation was enormous. The 3 plex she bought for $110K in 1980 sold for over $850K in 2006, 25 years later, and just that alone was more than the cash on hand when she started when she retired. The $750K profit was greater than what she saved in 40 years.
My dad on the other hand was the total opposite. We didn't do anything with him though he was a businessman and had the capital. Though he lived in NYC, he only invested in one mixed use property, got it for $25k in 1963, and sold for $1.1 million a few years ago when he passed. Had he worked with us, could've done several of them like my mom in law, and literally made millions. Pushed him to buy some in 1972 when 3plexes went for $70K but he wouldn't go for it. These days they're at least a million each.
Rental Property Investor · Sacramento, CA · Member since 2015 · 1k+ posts · 893 votes
7y
@Nick Farrell depends on your dad! I wouldn't let my pops come work for my investing business for free. I once fired him from helping me paint my house! LOL
@Mike Lee I agree with you. I’ve always been firm on that concept as well. My dad brings a lot of experience to the table when it comes to renovating a house so I’ll just have to make a choice
@Anthony Bellesbach thanks for the input. My dad is great with his hands. He would help big time with a possible renovation. I might just have to set boundaries with him
@Merritt S. Very good point. I think it’s a great opportunity to start something with my father that could last for a while. It’s something for us to do together as well. We are both mature enough to have differing opinions
Rental Property Investor · Ithaca, NY · Member since 2015 · 1k+ posts · 1k+ votes
7y
@Nick Farrell
Good idea, that’s what I did with my first rental. As a father, I want what’s best for my child. As a son, I don’t think my father had my best intentions in mind. Who knows, maybe you two work well together. Based off my experience, my dad and I are like oil and water but he was willing to invest in me.
Lender · Boca Raton, FL · Member since 2014 · 1k+ posts · 958 votes
7y
@Nick Farrell no matter what you do, make sure everything is clearly communicated, and written down in an operating agreement. I left a family business with my father because promises were made, that were not kept.
My decision to leave allowed the father-son relationship survive, as if I had stayed any longer, things would have completely blown up. Just tread carefully.
Investor · Chicago, IL · Member since 2009 · 1k+ posts · 1k+ votes
7y
I like the idea of family businesses. Maybe I am thinking of what to do with my good properties as I get older... At least a few of them will go to my kids one day.