So, I'll preface this with the fact that I admittedly didn't handle this famously from the start, and my re-evaluation is, in part, evaluating parts of this issue that I really should have looked into before I got invested. So I'm already beating myself up about that. But here's the situation. Please bear with me on the length; I just want to provide the right level of detail so you have accurate context.
I'm in a decent position to delve into real estate investment full-time. I have a great background for not just real estate investing, but building and expanding a business into an empire, hailing from corporate strategy and public finance investment banking from an elite firm. I've thought this through for months and have done a great deal of research to prepare myself for this new venture.
Here's the problem. My business partner, a relative of mine, is the principal of a remodeling & renovation firm (has worked in this capacity for 30+ years) and used to flip houses in Washington D.C. & Maryland before the recession. He's claimed to have made millions investing in the past, and wife and sons have said the same, but I'm having difficulties verifying that this is actually the case. We agreed his contribution would be in part financial and to be responsible for taking lead on coordinating & executing the remodeling/renovation work required to flip properties.
When we first discussed getting into business together, we attempted to weigh our % split based on the contributions that were being brought to the table. He claimed to have $60,000 in projects coming in, which would be his financial contribution to the corporation. That was 2 months ago and now I'm finding out that his clients chose not to pay him, he may have exaggerated that number to begin with, he doesn't actually have those funds. In fact, the progression of the business is suffering because he's not able to fund operations that we'd agreed he would fund. He's also been extremely slow in working to collect those funds. I've also since discovered that the licensing, bonding, and insurance of his remodeling & renovation firm have all lapsed. I'm questioning his judgement now (who lets those things lapse like that?), and his defensiveness when I inquire tends to illicit an argument.
I've put in 12 - 18 hour days, 6 days a week, working on building this vision - from concept to logistics, marketing strategies, market identification, building a network of vendors, chatting with investors, building business development strategies that have passed proof of concept, creating hiring strategies and an online HR management system, building a social media presence, creating marketing agency-grade marketing collateral, establishing branding, website building, building relationships with hard money lenders, you name it, I've worked on it and achieved success there. He claims to put in about 1 to 2 hours per day working on the to-do list I've given him (yes, I actually have to give him to-do lists and follow up 5 - 9 times before he gets them done). He really hasn't contributed much to this venture thus far. I found out last night that he actually hasn't had a client project in at least 2 months. It also turns out that he has the writing skills of a 7th grader, which is going to leave a less than ideal impression with anyone we attempt to do business with. We've also butted heads quite a bit in what feels to me like a power struggle because he's rather arrogant (he believes he's among the best contractors in Atlanta and in the entire state of Georgia, despite no evidence that that's the case), very headstrong about wanting an equal share of the business' profits and an equal level of authority, despite the fact that he's clearly not pulling his weight and is slowing things down dramatically. He's financed incorporation, general business/state licensing, website hosting, and logo creation - though I've done all the work on actually setting these up. Right now, he feels like more of a silent partner - if that silent partner wasn't contributing more than $100 here and there at a time.
This is my passion. It's what I'm meant to do - I spend 18 hours a day on this some days and it feels like play to me rather than work. And I'm damn talented at the business, research, analysis, finance, marketing aspect of this work. I can confidently say that because other people have lauded me for just that in the past. I'm a Mensa member, I'm a Type A, ENTJ/INTJ overachiever who has accomplished more at 27 than many have at 50. I say all this not to sound like a pompous jerk, but to highlight that failure isn't an option and I really need to be successful with this. I can't thoroughly convey how much passion burns to accomplish what I'm setting out to accomplish. We're supposed to have signed a shareholder's agreement at the start, but I couldn't bring myself to do it because something in his lack of understanding of certain concepts, etc. didn't feel quite right. But I kept putting in the work and grueling hours because I love this so much and want this so badly, and each passing day that I learn more about how this guy operates, I'm sort of glad I haven't signed yet. However, we did sign NDAs and non-competes (which I've been told (by an attorney) are moot at present since the corporation we've founded hasn't done any actual revenue-generating business yet).
I'm sure you're saying that this sounds like a dreadful situation, and that I should exit ASAP and walk into the sunset. But he is a relative. I just moved here to Atlanta to do this with him, and I am staying at his place, at his insistence, until I get acquainted with the area & find a place to live. I know, I know. It's made everything stickier. I wasn't raised around the guy or anything, but he is family, he wants to be close, and if I'm honest with myself, there's probably a seed of doubt in my heart wondering if I'll be able to accomplish all this alone or find someone who sees all the great things I can do and will want to partner up. I feel like over the past 2 months I've been trying to run to the finish line but I'm dragging this guy along, who isn't just crawling, but is actually holding onto my leg the whole time. Despite his arrogance and hotheaded, off-putting temper, he's a nice person who's always trying to help people. But on top of all this, he gets defensive and surly when I offer up advice gained from successful investors from BP on how we should approach the venture, which will make professional growth hard. I wonder now whether he's competent / intellectual enough for the ultimate goal I want to achieve - building a national, multi-million dollar real estate investment firm that has investor & agent partnerships all over the world. Am I wrong for feeling this way?
This is a really bizarre situation for me. I've clearly made some mistakes, here - some that intellectually, I certainly know better than to make, but that emotionally given the circumstances, I naively thought could correct themselves or be solved without incident. So I'm trying to focus on how to move forward to accomplish my (rather ambitious) goals. If you were me, what would you do next? Would you try to make this work, find some alternative option for his involvement, or pass altogether? If you'd pass, how would you handle the logistics around incorporation, website, logo, etc. when you did all the work but didn't fund it? Perhaps that part's a legal issue; attorneys & lawyers, feel free to chime in. But BP, what would your next steps be if you were in my shoes? Apologies for the length; there's a lot going on here. Thanks so much for reading. I could use your insight.
