Partnerships

[Justin Sheley]

As a newbie real estate investor I was hoping you guys could shed some light of the benefits of having a partner when purchasing properties. I have been faithfully listening to the podcasts and I know @Brandon Turner is a big fan of partnerships, however I have one basic concern.

- With both my wife and I being small private school teachers I would consider myself a "hustler" to get the properties I own. We really have to pinch every spare dollar in order to make this dream a reality, and we are really just starting out as we close in two weeks on our second "house hacked" multifamily. I am very thankful for a great experienced mentor here in Rockford who has helped me created a strategy for the area, but I am struggling to understand if I should be looking to use a partner this early on in my investment portfolio. If I am able to purchase a SFR for 40k that cash flows $400 a month with a down payment of $8,000 why should I bring in a 50/50 partner so that each of our down payment is only $4,000 but my monthly cash flow is $200. I don't ask this out of a spirit of pride as if I couldn't use a partner, but with the limited number of conventional loans I can use, is it really wise to split cash flow on this deals? Or is it better to use partnerships when I get to the point of needing creative financing to get a deal.

I appreciate any feedback and advice you have to give. After I close on our multi-family on the 28th I am hoping to buy two single family properties in Rockford, IL this summer. I just want to make sure I am understanding all my options and making the best decisions since I am just getting into the game.

Thank You,

Justin Sheley

[Joe Villeneuve]

If Henry Ford had said the same thing about his first car, he would have continued to make all of his cars out of his garage, and if he were alive today, he would have probably made a total of 200 cars.  He would have kept all the profit though.  Oh, and there would be no assembly line...which is an example of partnerships on steroids.

There are three reasons why you form a partnership.  Your Partner can do what you:

1 - Can't do,

2 - Don't want to do...and the most important one,

3 - Shouldn't do.  Just because you can, doesn't mean you should.