Business Management

Should Your Family Get Involved in Your Real Estate Investing Business?

Expertise: Flipping Houses, Personal Development, Real Estate Investing Basics, Mortgages & Creative Financing
105 Articles Written

Many of us have been in them…

Want more articles like this?

Create an account today to get BiggerPocket's best blog articles delivered to your inbox

Sign up for free

Many of us are still in them…

Some will stay in them forever…

Some can’t wait to get out of them as fast as they can…

I’m talking about the family business.

You see, I was once involved in my family's flooring business – which subsequently led me into my current full-time house flipping and real estate investing business. And although I did enjoy working with my family in this business, it did come with a level of complexity you just cant experience in a regular non-family business.

And as anyone who has ever owned and operated a family business has most likely experienced – things in a family run business can get complicated fast!

So if you are running a real estate investing business, should you get your family involved?

The Family Business Dilemma

When it comes to a family business, there are pros and cons.

On the one hand, you have family to help in the business. I love my family and I think the world of my brothers and sisters. We ran the family flooring business together for nearly ten years and fortunately, we became very successful.

On the other hand, you have family who helps but because of the emotional attachments and personality conflicts – there’s a level of drama that most people can do without. This level of drama and conflict is the kind that you can only experience in a family run business.

For me, I wanted to strike out on my own and do my own thing – namely become a full-time real estate investor flipping houses – so I left the business and its now in the capable hands of my younger brother David.

As much as I loved working in the family business, I desperately needed independence and wanted to do things on my own without having to answer to anyone. Not that I’m some rebel – I just wanted to do my own thing.

And I couldn’t be happier now being on my own, doing what I love.

A Chip Off the Old House Flipping Block?

A few weeks ago I wrote a post here on Bigger Pockets about my daughter Katlyn wanting to get involved in my business and the power of indirect influence. As shocked and amazed as I was that she actually wanted to get involved, I ended up taking her on three days a week in my new office in Bourne, Massachusetts.

Home for the summer from design school, Katlyn wanted a summer job and I had an urgent need. I didn’t really want her to go back to cashiering at Stop and Shop Supermarket, and although she was working another part-time job with a local architect I often do business with, she had the hours available to work with me.

So she came to me and asked if I needed help in my business. At first, I was a little nervous – but didn’t let her know that. I was thinking how fast paced my business is and wondered if she could keep up with the demand.

I was also reluctant because I had no idea how much training I would I have to give her – and if it didn’t work out – what could I do? It’s not like I could fire her! Quite honestly, my house flipping business is super busy right now. Our deal flow now is just through the roof. We are sourcing multiple deals every week and have five deals going right now alone!

In fact, most other people in our market are having real difficulty finding good houses to flip, but thanks to the hard work of my acquisition manager and really solid teamwork, we are finding deals almost faster than we can take them on.

So back to Katlyn…could she keep up?

I mean it’s not like I’m running some slow, low pressure business where people just punch the clock and cruise Facebook all day commenting on pictures of cats. Our office is super-fast paced – with the phone ringing all the time and deals and paperwork flying around everywhere.

Could she handle this kind of environment?

Fortunately for me, all my fears were completely unfounded. After just three days I knew I had a star on my hands. In fact, I couldn’t be more proud of the young woman Katlyn is turning out to be.

She immediately took the office by storm – entering bills into QuickBooks, filing weeks of messy paperwork overlooked in the move, getting the mail, making adjustments on excel spread sheets, cleaning the office, running errands, coordinating staging pickups and delivery and set ups…I am amazed at how well she is doing.

In fact, my bookkeeper Rianna came in one day to assist in training her on QuickBooks and she told me that Katlyn was the best one so far to work with and how quick she was to learn.

As you can imagine I am super excited to have her working for me part-time this summer and to have had the pleasure of being exposed to my business.

But as proud as I was and still am of her for taking the initiative and wanting to get involved, when she asked me I was a bit conflicted because of this family business thing…

The Power of Painting…

How Katlyn got involved with my real estate investing business was a big surprise to me.

About a month ago I purchased an office condo for my real estate investing business. As you can imagine – business doesn’t stop just because you’re moving, not to mention that transitioning from one office to another is a lot of work.

Although the office is in great shape, we decided to paint the interior walls to spruce it up. I was just going with the typical antique white like we use in most of our rehabs but my daughter Katlyn wanted to help with the color choice.

I mean – she is going to design school after all – so I said sure. She picked a green that I was a little skeptical about – but I went with it. In the end, it was the right choice. Everybody in our office and any visitors we have who come to the office love it.

To get the office ready, I was working double duty that week to get it done and not just Katlyn chipped in to help – but my younger daughter Hayley surprised me and volunteered to help as well!

I had no idea if they were going to slow me down, make a mess or get tired too quickly – but I was touched that they noticed how hard I was working and wanted to help.

Honestly, I hate to paint and I don’t even know why I was painting my own office when I had three rehabs going on and have plenty of cheap, out of work painters ready to go at a moments notice. I guess it is just the hard work in me and thrifty nature because this was my office and I wasn’t flipping it so I couldn’t see the value in paying for it.

Besides, my office staff volunteered to help as well and believe it or not – we all had fun doing it.

Katlyn is actually a really good painter (I suppose I should have known that). And much to my surprise and amazement, Hayley was a great little painter too! Although rolling was tough for her little arms – she was determined to roll right along with her sister…and she did.

Hayley worked so hard that day that when she went to bed that night, she was out like a light in two minutes from her hard work. I was proud of my little girl as I tucked her in that night.

And she drifted off…I just stared at her sleeping little eyes and I thought to myself: “is this the start of yet another family business?”

The Family Real Estate Investing Business?

As proud of them as I was for their desire to help their old man, I started to wonder what the future held for my soon to be renamed real estate investing business.

Would it become a family business yet again?

Although I never set out to have my kids involved in my business, it seems like there is a strong interest there. My wife and I always wanted them to find their own way by empowering them with the ability to choose for themselves. I just never thought that choice would come back to real estate.

Sure, Katlyn has three more years of college – so there’s plenty of time. But I think it’s so cool that she wants to be involved in real estate already.

I’m not sure what my daughter Hayley is considering as a career path – but with a real estate investing father and a real estate broker mother – I can’t imagine she isn’t being indirectly influenced as well.

Maybe she does, maybe she doesn’t. Right now, she likes watching all those baking shows and just the other day she told me she may want to be a baker and make those awesome cupcakes she’s seen on television.

I told her if that’s what she wants to do then she needs to make the best cupcakes in the world – because if that’s what she want to do then she should go for it and be the best!

But what if she too wants to get involved in my real estate investing business? Should all of us go down the family business path?

It may seem great now, but what happens when things get tough?

Or is it better to NOT get your family involved in your real estate investing business?

As proud as I am with both of them, it’s a worthwhile thing to think about.

What do you think? Is a family real estate business a good idea or does it just eventually lead to conflict, hurt feelings and uncomfortable awkward silences at the Holidays?

Please leave a comment below and let me know what you think!

Photo: D. Sharon Pruitt

Michael LaCava is a full time real estate investor, house flipping...
Read more
    Mark Ferguson
    Replied over 7 years ago
    My dad got me started 10 years ago and we still work together. My mom and aunt help with accounting and I rent to my brother in law. My sister also provides private money. Everything is in writing and everyone knows their responsibities. I think people get in trouble when they assume everything will be fine because it is family and they don’t need agreements.
    Replied over 7 years ago
    Great point Mark. Get it all in writing and everyone needs to know up front what their roles and responsibilities are. Exit strategies should be made aware of as well. I just made a list of responsibilities and daily tasks for my daughter so she understands what is expected of her. She fills it out weekly as she checks them off as accomplished. What are you doing most of these days. Buy and hold or flipping?
    Kyle Hipp
    Replied over 7 years ago
    I agree with Mark that business with family needs to be formalised with proper paperwork. I own a property with my father and from day one I believe we have both made an effort to overcommunicate. I got into real estate about 7 years ago and had a deal about 3 years ago where I asked my father if he wanted to partner. We did and he now has done more individually as have I. My father even just partnered with my sister for her first property. I was naive and rebellious as a teenager and young adult but learned the value of my father’s wisdom. I am very similiar to him today. While I think this is a great thing, it also means we both have more dominant personalities. With our over communication we have been able to operate very smoothly through many situations. We have even discussed the possiblity that we might never partner again or need to dissolve our current partnership. Quite frankly I think my father is one of the few people I would not have a problem partnering on something currently because of oir relationship. We both know at the end of the day that we would dissolve our partnership even for a loss if it would negatively affect our relationship. Just like any investment decision I believe that folks need to thoroughly think through a family business of any sort. It is harder than a friendship partnership and needs to be managed as such from the begining. I have a 2 year old son and with the plans my wife and I have for our real estate investing I would love for my son to be involved in the business. Truthfully I will be a little hurt if he chooses another path. I must however reign in my desires in the best interest of my son and our future relationship. I think it is fantastic what your daughter has done and how you have gone about the process. It is fantastic when we step outside of our comfort zone and are pleasently surprised by the results. Great topic!!!
    Replied over 7 years ago
    Thanks Kyle. Thats good if the business relationship doesn’t work out with your dad it doesn’t affect your personal relationship. Too many families break up over business which is a sad truth. Well you have a ways to go with your 2 year old but I was picking up scraps of carpeting with my dad during summer break from school at a very early age. Even if you take your son to view your rehabs and get him a plastic tool kit to act like he is helping. How cool would that be? I was blessed with 2 girls and the tool box thing wasn’t there for them. Oh well I am grateful they are both healthy and that is was is most important. Thanks for sharing your story & would love to hear more.
    Karen Rittenhouse
    Replied over 7 years ago
    My sons are both invested in our business through sizable loans plus they own 6 properties each which we manage for them. That’s about as “in the family business” as they want to get. However, my husband and I both work in the “family business”. I have written articles on why this is a bad idea…. Quite a transition from spouses to business partners. For us, fortunately, it has worked out – with the help of some major transitions. As I’m thinking this through, I’m pretty comfortable with that being all the family we have in one business. Kudos to you and yours. Not many can successfully make it through! Thanks for sharing.
    Replied over 7 years ago
    Thats Great Karen and a testament to you and your family. Thanks for sharing as well! My wife works for a real estate company as an agent and she recently got her brokers license. My goal for next year is to start a traditional real estate business as well.This way I can keep all our sales in house. It is another business altogether and I mentioned to her if she would be interested in doing that and running it. I have my reservations though. I see how hard she works and I don’t want to put any more demands on her. If you have anything you can share that would be great. We have been happily married for 21 years this june 13 and I don’t want to do anything stupid, LOL
    Karen Rittenhouse
    Replied over 7 years ago
    Hi Michael: You wife opening a real estate company would be great. We opened one a couple of years ago. That way, you can also manage properties for other people (properties you don’t own). And, she’d basically be self employed – that would be her company, investing would be your company. She could be the broker-in-charge or she could hire another agent to fill that role. For Jim and me, we’re both in the investing business, started and grew it together. Caused a lot of bumping heads… You have a best-of-both-worlds situation lined up as far as I can tell. Let us know how it goes!
    Replied over 7 years ago
    That is how I was thinking I would structure it. Glad to see you agree! I will let you know how it goes when the time comes. I don’t want to push her and want her to make the decision to do it. She has never been a business owner and it is a big responsibility going from being an agent to broker/owner. She was a stay at home mom until about 6 -7 years ago when my youngest started school. She started as an agent in the worse time so I give her a lot of credit to stick it out and now it is finally paying off for her Thanks for your feedback and I may just ask for some more down the road if you don’t mind. Always much appreciated!!!
    Glenn Schworm
    Replied over 7 years ago
    Mike, as always I enjoyed your post very much. My kids are much younger, the oldest is 13. At this point they have seen so many “ugly houses” as we call them that they are sort of sick of it. However on one of his reports he said he wanted to run his Dads business one day, so who knows. I have never had a family business, but after reading Karen’s comments, I sort of forgot that my wife and I are equal owners. I can say that for us, the business was one of the glues that held us together during some tough times. I love your stories about your daughter and think it is great she is doing well with you. I can only imagine that makes you one proud papa. As for my kids, time will tell, I will support them no mater what path they choose, but if they do choose to work with us, I would welcome them with open arms. Great article, thanks!
    Replied over 7 years ago
    How cool is that. He wants to run your business some day. Must of been a very proud moment for you to say the least. Thanks for reading and I enjoyed your post as well on reputation.
    Replied over 7 years ago
    Hi Michael, I found your post really interesting. And believe me there’s nothing wrong if your daughters want to join your real estate business. Just get the paperwork done and you will have nothing to worry about. I am myself working in the family business and we all are really happy and doing extremely well. Good luck and keep posting! Reply Report comment
    Replied over 7 years ago
    Hi Michael, I found your post really interesting. And believe me there’s nothing wrong if your daughters want to join your real estate business. Just get the paperwork done and you will have nothing to worry about. I am myself working in the family business and we all are really happy and doing extremely well. Good luck and keep posting!
    Replied over 7 years ago
    Thanks for sharing that Lara. Good to see it working out well for you and your family. What are some of the different positions you each have?
    Replied over 7 years ago
    I started in real estate in 1995. In 1997 my brother told our family about buying at the auctions and the big profits available. In 1998 I bought my first auction house on Olympic Street in Spokane, Washington and I was hooked – and a family business was born. I no longer buy at the court steps (but I did from 1998 to 2010) but still flip homes. At one point we had 6 family members involved in the family business. Someday I will write a book about what I went through from 1998 to 2010 in our family real estate investment company. I am no longer involved with any family members and am really enjoying being on my own. Am I opposed to starting a family business with my own kids someday? To be honest, the jury is still out on that one. My oldest is 19 now so I suppose it could come up someday. But it’s not today and for this I am glad! I think I would want them to work in real estate for another company for 3-5 years first before bringing them into my business – just to make sure they really wanted to be involved in this amazing industry.
    Replied over 7 years ago
    Good Points Stuart. I agree it is not a bad idea if they worked for someone else for getting additional experience on what it is like to work for someone. Maybe that will inspire them to start their own business or rise to the top in that career. The future will tell and I will support their decisions and guide them as a DAD. Thanks for sharing!
    Replied over 7 years ago
    Good Points Stuart. I agree it is not a bad idea if they worked for someone else for getting additional experience on what it is like to work for someone. Maybe that will inspire them to start their own business or rise to the top in that career. The future will tell and I will support their decisions and guide them as a DAD. Thanks for sharing!
    Replied over 7 years ago
    Good Points Stuart. I agree it is not a bad idea if they worked for someone else for getting additional experience on what it is like to work for someone. Maybe that will inspire them to start their own business or rise to the top in that career. The future will tell and I will support their decisions and guide them as a DAD. Thanks for sharing! Reply Report comment
    Replied over 7 years ago
    Hey Mike This was great. I hope you keep doing periodic updates on how this goes. It is very interesting to hear how well she is doing. How is she doing with her work with the architect? Along the lines of what @Stuart said it will probably be as valuable for her to get some real estate related experience outside of the family business to help her decide if that is the path for her. Happy anniversary tomorrow BTW!
    Replied over 7 years ago
    Thanks Shaun – Long day still working on catching up on emails while watching the bruins. Time will tell. She is working out great with the architect. I spoke with the architect last week and she told me how impressed she was with Katlyn and all she is doing on a short time. I asked her to give me her honest opinion and don’t’ hold back as she is a friend of mine and I didn’t want her to sugar coat it. It was music to my ears to get that feedback. Just makes me so proud.