Buying out of area and partnering with a local investor

[Sean Dezoysa]

Hi, I notice in my area (Southern California) a few investors take the approach of buying out of area and partnering with someone locally. Sometimes this person is a friend or family but sometimes it is just another investor.

If any of you guys do this, what steps do you take to ensure the investor who will act as the local partner, will perform his responsibilites well?

[Mehran K.]

A solid partnership/operating agreement is a must and should spell out all the details you two agreed upon. Use a lawyer to draft it up instead of just using a cookie cutter agreement.

It's real important to screen potential partners, even more intensely than you would a tenant. Make sure they really do know their market well and have investment philosophies similar to yours. What happens if you want to cash-out refinance a property, and your partner doesn't believe in debt? Figure out all these "What if's", like Aaron said, before you go into business with each other.

Doing this has been smooth for me so far, it does help if the other investor is a BP member as well :)