Buying first investment property with partners to spread risk?

Question

Me, my father and Uncle (Mr. money bags) are all interested in getting into real estate. We all bring our own skills to the table, I'm computer savvy, able to find deals, and negotiate. My dad is a handyman and my Uncle has a lot of capital. We were all thinking of making our first purchase together, something small and cheap. We figure by doing it this way it'll make it easier to learn and spread the expenses around. Honestly my first deal I just want to get my feet wet and learn without getting discouraged if it doesn't go exactly according to plan.

Obviously there's something to be said about doing it on your own so you don't have too many cooks in the kitchen, but what does everyone think about getting into your first purchase with others to help learn and cover costs?

Joel Owens · Answer

You need an operating agreement drawn up by a specialist attorney. Do not skip this step just because it is family.

Defined roles and exits are key. Everyone gets excited going into a deal with the thoughts of making big money. When it goes the other way after purchase and people start losing money and creating stress in their lives then everyone points the finger and lays blame.

That's when you need to point to the written and SIGNED operating agreement notarized by all parties.

Hope for the best but plan for the worst is what investing is all about. You might never use it but you will sure be glad you have it if you do.

Eric P. · Answer

all great points.. I was always told an exit strategy at the beginning is one of the most important things to have. We'd look for something small, simple and cheap and use it more for learning rather than making money, though if we can do both that would be great lol! even if we had to hold it till it sells lossing $ each month its only like $200 a month each, and if we have to sell for a loss it's again split. Being this is a first there's more opportunity for things to go wrong, so just teaming up to spread the risk. Once we do the first one and we learn all that's involved we may branch out to purchase our own

Gino Barbaro · Answer

@Eric P.

I think it is a great idea to partner up. You all have specific skill sets to bring to the partnership. Outline your skills and responsibilities in a partnership agreement and proceed

If it doesn't work out, you can always sell and part ways. Just make sure to have everything in writing

Buying first investment property with partners to spread risk?

Buying first investment property with partners to spread risk?

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