Investment Partners: Do Partnerships Make Investing Better in 2023

If you’re new to the real estate game, having a partner can relieve some stress. A good partner will help share the responsibilities of owning a real estate property. It could also be easier to afford a larger down payment when you have the help of a partner. If there are certain strengths that you lack when it comes to investing, having the right partner to fill those skill gaps could assure a successful investment. 

There are also many downsides to forming a real estate investment partnership. First, you’ll have to share any profits you make with another person. There’s also always the chance that you and your partner get into a dispute that makes it near impossible to work with one another. That’s why it’s important to develop an investment plan with each other before moving forward. You should also have a contract written up to prevent any possible legal issues down the line.

Finding the right partner can also be a bit of a challenge. It’s important to find someone you work well with, but they should also have similar goals. Be aware of all the advantages and disadvantages of having a partner before you take the leap.

Sometimes real estate partnerships are as simple as one person doing the work while another gets the financing, if you are interested in learning how to become a money partner in real estate investing, click the link below for a free strategy call today.

Advantages of working with an investment partner

As mentioned above, there are plenty of reasons to invest in real estate with a partner. A good partner will help out when it comes to expenses and the need for resources. Potential partners with experience in real estate investing may have connections with local contractors, real estate agents and other investors. Partners that both have good portfolios are also more attractive to certain lenders.  

Having a partner means that you’re sharing the risk of an investment with someone else. If the investment doesn’t turn out as planned, you won’t be the only one losing money. Sharing in the losses will likely leave you both with a little bit of money that could be used for a later investment.

Being able to share responsibilities is one of the best things about a real estate partnership. There are plenty of duties that come with real estate investing, and if you’re working another job on the side, it’ll be hard to take care of everything. Being able to pass some of that responsibility onto a partner will help save time and make the process go a bit more smoothly. Partners also help share the financial burden that comes with owning property.

Disadvantages of partnering up

While there are many advantages to having a real estate investment partner, it’s important to consider the disadvantages as well. One of the main reasons people shy away from partnerships is to avoid sharing profits. After all, if you’ve worked hard to find a secure a piece of property, the idea of sharing profits with another person might make you uncomfortable. Thinking about how much money you could be making without a partner might eventually cause a rift in your relationship—even if it’s unrealistic for you to do all the work yourself.

When you have a partner, someone else will be sharing the responsibilities…but also the control. Conflicting ideas about how to properly take care of your and your partner’s investment will likely cause arguments from time to time. For example, one of you may want to make certain renovations before selling a piece of property while the other sees this as a waste of money. With these arguments, it’s best that you both feel heard. It’s also good to consider all ideas before simply saying “no.” This could help prevent small arguments from turning into large ones.

Discover How To Set Up A Joint Venture With This Step By Step Guide

Planning your partnership

The best way to avoid any possible issues with your partnership is to develop a good plan. Are you planning on having a 50/50 partnership, wherein each partner takes half the responsibilities and half the profits? These partnerships often work for those that are okay with sharing profits and control of the investment.

Some people prefer to have a partner that has minimal responsibilities but a higher capital investment. This type of partnership can work for those that need some help with certain aspects of the investing process, but would rather retain full control of the day-to-day responsibilities. Either way, you and your partner should discuss this before making any investment decisions.

Decide on what roles each partner will play and list them all in a written contract. It’s best to get some help from an attorney or other legal professional when developing this contract. Have all partners read over the contract with their own attorneys and make sure it works for them.

Finding the right partner

There are plenty of people out there looking for a real estate investment partner. It’s important to find someone you trust, but they should also complement your strengths and weaknesses. Use those strengths and weaknesses as a starting place when looking for investment partners. Once you have a list of potential partners, speak with each of them. You should find out their goals and decide if they mirror your own.

Some people opt to have a trusted friend as their investment partner. This is beneficial in many ways, as you can usually trust a friend to not leave you high and dry. Arguments caused by investments can sometimes cause irreparable rifts in friendships. Many people would rather risk investing on their own than potentially losing a lifelong friend. The same is true when investing with family members.

When looking for a real estate partner, be sure to utilize all your resources. See if there’s any interest among experienced investors in your area. Even if they aren’t interested, these investors may know people that are. Many online resources are also available to those looking for real estate investment partners.

Do you need a partner?

Now that you know all the advantages and disadvantages of having a real estate investment partner, decide if you actually need one. Sure, an investment partner can help share the expenses and responsibilities, but is that worth sharing your profits? If you have the time and skills to invest in a piece of property, it might be worthwhile to do things on your own.

Sometimes the best investment partnerships are forged between investors and broker as we fight to get you the best rates. To learn more or to get started today, click the link below to book a free strategy call today.

Should You Become Investment Partners with a Family Member?