Do you need a partner?
Do you need a partner?
A lot of new investors and some seasoned one will feel the need to take on a partner when they enter into the real estate investing business. This can be a good thing, this can also be a terrible thing. It all depends on who your partner is and why you want them as your partner.
I have been involved in one terrible partnership and one good one. I have also been witness to a slew of really bad and dysfunctional partnerships. My default setting in regards to partners is don’t do it. I assume that most of you will ignore this advice on the surface. So I will go a bit further.
The worst reason to choose a partner is because that person is your friend. Friendship and partnership can be two completely different things. You need a partner who strives to produce. You need a partner who wants to do their part better than you can do your part. Your partner must view you as a fragile resource to be cultivated. Aside from being overly comfortable with you, a friend partner is much more likely to believe that your friendship will overlook their lack of effort. Your friend, or relative for that matter, may think nothing of slacking on his end. He may take your effort for granted, and leave you with the majority of the work. Let me be clear, friends suck as partners.
So who would make a good partner? If you really feel the need to have a partner, then I suggest you do an evaluation of your skill set. Figure out where you are strong and figure out where you are week. Then seek out a partner with the exact opposite sill set. If you are great with numbers and bad with people then you want a partner who is great with people, you can handle the numbers part for him. If you have money and no time then you want a partner with lots of time and no cash. It is simple, opposites attract for a reason.
The goal of a partnership is to take two incomplete skill sets and to augment them in a way that gives the business the best chance for massive success. Too many new investors form entities with people just for the sake of having someone to hold their hand through the process. Don’t make that mistake. Either go it alone or find a partner who compliments your skill set.
To your success
Josh
Comments (4)
I had a partner once that was one of my best friends from High School. He was supposed to rehab a house that I bought and was supplying the materials for, he pretty much did nothing while I was racking up hard money interest. It did not end well
Josh Caldwell, over 8 years ago
I forgot to add in that I was "Teaching" my partner about the business also. So in the end my partner wasn't really bringing much to the table. Fortunately, the partnership ended quickly & fairly amicably.
Bob Mastroianni, over 8 years ago
Good advice. I'm actually in the process of analyzing a few potential deals & one of them in particular I'm thinking that I may want to include a partner. It's a tough decision because, like you, I had a partnership in the past that didn't work out. Fortunately, it didn't last very long, but I learned some good lessons & am a little tentative to form a partnership again. In the end, the problem with my partnership was that I was much more committed to the idea of real estate investing than my partner was.
Bob Mastroianni, over 8 years ago
Bob
it always seems that one partner does the work and the other is more of an anchor. The real trick seems to be that you divide the duties up front, so each of you have a task to do.
To your success
Josh
Josh Caldwell, over 8 years ago