Keys to a Successful Partnership

In building my rental portfolio, partnerships have been not only helpful but completely essential.  These are the key principles I've identified in finding a developing partnerships:

Necessity
Each partner ought to bring something to the partnership which is a necessity to the other partner.  You might have cash but be too busy to find deals, or have a flexible schedule but no cash.  You might be skilled at finding and purchasing deals and need someone who can manage the project and close the sale or refi.  In my partnerships so far, I have focused on finding deals and putting together the team to execute the project, while partnering with people who have more seed money and willingness to do accounting and numbers analysis.  The necessity of a partnership also hinges on timing.  You may find a potential partner who offers a complementary skill set to yours, but the timing may not be ripe due to various life circumstances.  Keep the door open to those partnerships, they may come to fruition later.

Synergy
If each partner works together in harmony, and communicates effectively, a synergy occurs where the success of the partnership is greater than the sum of the individual contributions.  Here are examples of synergy:
- Partners secure a deal with short-term Seller Financing because the sellers feel comfortable that there are multiple skilled buyers teamed together with complementary skills rather than only one buyer with a limited set of skills and refi-ability.
- Discussion and brainstorming yields a creative solution to a problem which is greater than the ideas either partner had come up with individually.
- Each partner specializes in a specific aspect of the business and can reach higher levels of innovation.
- One partner is more aggressive by nature and the other is more conservative, so the combined approach yields a balanced middle path.

Contribution
Each partner should make contributions beyond the "minimum needed" to perform his/her defined responsibilities in the partnership.  Performing extra tasks without worrying overly about "keeping score" allows a natural sense of enthusiastic contribution and reciprocity to occur.

Sincerity
Each partner must embody sincerity, an honest willingness to contribute his/her best skills and efforts to create success.  If a task needs to be done, there must be willingness to "jump in" and do it, knowing that the other partner will do the same when needed. Sincerity means having a consistent attitude of integrity and enthusiasm, while keeping in mind the original goals for which the partnership was formed.

Simplicity
For my long-term buy-and-holds, I currently only have one partner that I work with.  That way we can optimize our methods for accounting, property management, acquisition strategies, and pacing.  Additional partnership require additional negotiation, business structure, and cooperative decision-making.  Doing a flip is a good way to work with a partner for a successful short-term project without having to maintain a long-term business infrastructure together.  In a long-term partnership, simplicity should increase as each partner knows that some segment of business tasks are completely handled competently by the other person.

Summary
Utilizing partnerships can be a wonderful way to achieve real estate success.  Seek to embody the qualities articulated in this article, and you will find successful partnerships which accelerate your path.