A bad partnership ends with 1.5 million GONE

[Mike Alder]

I received a call from an investor the other day that had 4 houses he wanted to unload. When I asked why he was selling he replied that his partner bounced on him and left him with these D class homes he wanted nothing to do with. 

I took down the addresses, told him I would check them out this week and follow up with an offer. He called me the very next day to see if I looked at them yet. I told him I didn't but gave him a date that I could go visit them. He told me he really wanted to get rid of them (talk about motivation) as they were a constant reminder of his bad partner. I know a lot of investors in my area so I asked who his partner was. He gave me his name and I only replied with O-boy! This guy is a very well known con in our area and I've met several investors that he took for $50k-$100K over the years. I even financed him on a property several years ago and although he lived in a very affluent part of town I would have to drive to his gated community to shake him down every month. What this investor told me next blew my mind he told me this guy blew through $1.5 million of his money over the years and now has left him high and dry! BARF!

It gets worse, I looked at the properties and 3 of the 4 were horrible! Most of my investments are in C&D class areas and I wanted nothing to do with them. I made an offer on the 3 and suggested he go traditional with the 4th to try and recoup something. I'm sure we will have a deal in the next few days.

The reason I share this is to remind us no matter how charming our partners come off ALWAYS have a 3rd party attorney write up very clear partnership agreements to help prevent things like this from happening. The buddy system doesn't exist this is a business and needs to be treated like one.

Have you come across situations like this before?