The Benefits of Teaming Up in Real Estate Investing For Partners.
The horror stories of business partnerships: the tale of one partner cheating the other out of his life savings, the partnership turned Ponzi-scheme with one partner in the dark about the scam, friendships ruined by a disagreement or financial losses, and families torn apart by well-intentioned business plans. Who knows how many potentially successful partnerships never happened because of fear induced by these scenarios and others? I started real estate investing in a partnership several years ago which is prospering today, so I wanted to share the potential benefits of teaming up. Benefits of a Real Estate Investing PartnerPooling Resources: Starting any business can take a lot resources, often too many for one person to handle themselves. If you find a person with similar interests, goals and work ethic, it may be possible to pool your resources to get off to a smooth start. Teaming up make also make bank financing possible, where individually you were unable to qualify during this time of strict underwriting requirements.Double Analysis: It is important to master the art of deal analysis. For someone just starting in real estate investing, analyzing a property can be quite the undertaking. There are hundreds of considerations when searching for that first real estate deal, so having someone sanity check your analysis greatly increases your odds of an accurate analysis. I can recall several properties I concluded were grand slams, only to have my business partner point out a flaw that I did not consider, saving us from a potentially disastrous deal.Complimentary Qualities: Every person brings different strengths and weaknesses to a partnership. While one person may be a numbers person, the other might be able to visualize improvements to a property.
Understand what each person is good at and put those skills to use to improve your business. In my business, my partner is an engineer and is able to accurately estimate renovations costs, a skill I have not yet mastered. However, I am able to market the business in ways that he would not feel as comfortable. Our understanding of one another allows us to leverage these skills and yield to one another when necessary. Task Division: Real Estate Investing is not easy! There are a lot of tasks that can easily overtake your life if you let them. Effectively and fairly dividing tasks can ensure that all partners are able to contribute to the business while not being overwhelmed. For example, I have been out of our investing market, forcing my business partner to handle day-to-day operations. It was critical that he manage contractors and ensure our renovations remained on schedule and on budget. To contribute, I had to step up in other areas, making sure our bookkeeping was up to date; our website content was continuously improving and finding new deals. It may be impossible to split tasks 50/50 at all times, but as long as communication channels remain open and goals stay aligned major conflicts can be avoided.Expanded Networking: The importance of networking cannot be overstated and networking becomes much easier when you have more than one person spreading the word. Additionally, each partner already knows people who could end up playing a part in your business, either as team members, lenders, contractors, or clients.Accountability: People who are on a workout plan or diet often have accountability buddies to make sure they stay on track. It is human nature to slack off when things get difficult or life gets busy, but business partners help keep each other focused.