3 Tips for a Successful Real Estate Partnership

If you plan to purchase a property with other people, leveraging Other People's Money ("OPM"), Other People's Time ("OPT"), and/or Other People's Experience ("OPE") to get started or progressing in the investing game, then you will need to find some investing partners.

When you are looking for a partner, you should be looking for someone with complementary skills and resources to those that you already have. You want someone who is like-minded and shares your vision and values, but you don’t want someone just like you. You are building a team, not a clone army!

Here are a few tips for finding good partners (co-investors or co-sponsors) for your team and your deals:

1. Do proper due diligence on any partners

Make certain that your future partners are a good fit for you personally and that they have the skills, experience, and character traits (e.g., integrity) that they claim to.

2. Listen to your intuition:

If that little voice inside says “Yes, this is the person!” then consider that a blessing. If it whispers “No, this is not a good fit,” be willing to listen to that as well. Even if a person is a logical choice for you, if your intuition does not like the fit be very hesitant to move forward.

The few decisions I’ve ever regretted in my life are the ones I made after hearing that voice and then choosing to ignore it. I have never regretted listening to my intuition though, and neither will you.

3. Have a Clear Contract in Place

Whenever you partner with anyone, have a clear contract in place. Everyone’s responsibilities and rights should be clearly laid out so that all parties know what is expected of them and agree to perform to those expectations. A contract should also provide clear exit strategies. Whether things actually “go south” or the time simply comes to move on, the contract will protect all parties and assist in a graceful exit.

Warning

You may be tempted to think, “This is my best friend/brother/etc. We don’t need a contract! We love each other and understand exactly what we are doing!”

The moment you get involved in business with your best friend/brother/etc. is when you need a contract most.

I’ve seen so close relationships fail because the parties involved were not all on the same page about what they were actually supposed to be doing. They did not, in the end, have the same goals or vision, and, worse, they did not have a good way to exit the business relationship while retaining the personal one.

A good, clear contract can actually help preserve a relationship. Your closest relationships are worth the extra effort, in the beginning, to make sure you're even closer at the end of a project.

As I've learned from my mentors, seek to create relationships for life with the best people you can find. Doing proper due diligence, trusting your intuition, and having a clear contract will help you establish and maintain those relationships.

About Monick Halm