Buy & Hold partnerships?

[Steve Wilmers]

Looking through the forums, it seems that most of the partnerships that I read about are typically involved with flips instead of buy & hold properties.  

Has anyone considered joining forces with a partner to purchase a larger buy & hold compared to purchasing a smaller property on your own?  I'm hoping to purchase a two or three unit in the next couple of months before the snow hits, and could really take advantage of a nicer property in a better location if I were to join forces with another investor.

Looking forward to hearing both the good and the bad!

[Curtis Bidwell]

I am at the end stage of a 24-year partnership.  We started with three partners.  One went bankrupt after about 5 years and we had to buy out his shares.  The two of us have had good and bad days.  Early on we determined the relationship was more important than the $. My partner is retiring and ready to be done with repairs, tenants, etc... I will buy his shares and carry on ... I still have 15 years of ambition:)  We may ink the deal this week, effective Jan 1st.  (I'll write about it after it's done).

We started with a 4-plex. Moved into 6 units. Then traded up to 13, added a few more before trading into commercial. The partnership currently has 78 units: 66 apartment/commercial and 12 SFR / duplex.

LESSONS LEARNED: (not an exclusive list)

• Each partners ability to maintain their own finances affects the partnership! Their credit affects the partnerships ability to purchase ... at good rates. Or the need to buy one out (ready or not!)
• Common goals, personal values and ideals make decision-making much easier.
• Clear communication and defined roles are a must. Make time to evaluate where you are at different stages - roles can change (We had a military partner that was gone for 4 years). Know who will get paid for what beyond partnership shares.  
• Have a defined exit plan.  Account for unexpected events (death, divorce, change in life goals).
• Have fun together!  Take the wives to dinner, travel to Hawaii, go scuba diving, skiing ... at company expense! 
• Don't get greedy! Greed destroys relationships!! 
• Don't take yourself too seriously.  Be flexible (my partner was the most flexible ... he almost always did what I said!)

Partnerships have advantages and disadvantages. So many end in disaster. We are probably an exception having lasted this long. I've enjoyed and benefitted greatly from it personally, professionally and financially.  I'm ready for the change, looking forward to accomplishing my next set of goals to be accomplished beyond the partnership.