Buying first investment property with partners to spread risk?

[Eric P.]

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]

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.