Business Management

4 Lessons I’ve Learned From My Made-in-Heaven Real Estate Partnership

Expertise: Commercial Real Estate, Personal Finance, Real Estate Marketing, Business Management, Landlording & Rental Properties, Real Estate Investing Basics, Personal Development, Real Estate News & Commentary, Mortgages & Creative Financing
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My current real estate business relationship is truly a match made in partnership heaven.

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Unfortunately, a lot of people don’t seem to be able to say this. They aren’t in good business or real estate partnerships. Maybe you’ve even had some bad ones before (I’ve had several). Yet when you do find that great match, you can enjoy going much further and faster than you could alone. The company can make the journey so much more enjoyable, too.

So what should entrepreneurs and investors be looking for in a great partner and partnership? Here’s some insight on how things are structured in my real current partnership.

Create Alignment

You’ve got to have alignment. If not, you’ll tear everything to pieces as you head in different directions.

When it comes to picking a partner to have in a company, especially when equity is on the line, make sure your goals and interests are aligned. If one partner wants to build the company to sell and the other has a vision of building to continue as the long-term operator, it may not be the best partnership. I always recommend finding someone who shares your vision.

Yes, there are times when we disagree on things. I mean, business isn’t all flowers and roses all the time, right? We don’t see eye to eye on everything all the time, but we always work things out to reach an agreement and get on the same page. At the end of the day, it comes down to achieving the big-picture vision.

Decisions should always be geared toward that.  

Man giving fist bump in sun rising nature background. power of teamwork concept. vintage tone

Related: The Most Flexible & Tax Efficient Way to Structure a Partnership

Find Someone Who Completes You

My current partner is a numbers guy. He’s always working with those darn spreadsheets. When it comes to implementing systems, he is the go-to guy. My side has always been about the sales, marketing, and business development.

Personality-wise he’s more of an introvert. I’m an extrovert.

Some skills may overlap. This is completely fine—especially in areas that are of the highest value for the company. For us, this is property acquisitions, running rehab numbers, and property management.

I know how to read a spreadsheet; it just doesn’t excite me. He can analyze a deal and fill out a contract, but he’d rather be in the office than knocking on doors and meeting people. You don’t want to have identical skillsets—that makes one of you unnecessary. Plus, then you’ll have to hire out to cover more gaps for certain needed skills.

But understand not just what you are good at, but what you makes you thrive, too. 

Related: The Biggest Real Estate Moguls Relied on Partnerships. Here’s Why You Should, Too.

Know Each Other

Carrying on from the last point, there should be clarity about roles and skills, etc. The great thing about structuring a partnership the right way is that the other partner should know when he needs to take over something.

In the event we need to run financials, my partner will know to take it and run with it. Likewise, when it comes to anything in the marketing department, I know that’s my responsibility.

This factor also rolls over into understanding when your partner has their plate full or if something else outside of work is demanding some of their attention.

two puzzle pieces about to be fit together with blurred cityscape in backdrop

Have a Plan for All Scenarios in Advance

Anything can happen. I expect this current business relationship to last. Many don’t. Sometimes you can’t tell in those early days. Just like in personal relationships, some people change, some don’t, and some appear to be on the same page but aren’t.

Some become more invested when things go well. Others might derail your work. Or you or your partner may face totally unforeseen circumstances in your personal lives.

You just don’t know.

What I do know is that it is always better to have good partnership agreements and to have a plan for all contingencies. It makes things much cleaner, simpler, more streamlined, and more amicable if things don’t work out. The partnership agreement will give you a predetermined guideline to handle the toughest situations.

And when this is in place, your clients will be better served, as will all of the partners.

What have you learned from your real estate partnerships?

Let me know with a comment!

Sterling is an multifamily investor specializing in value-add apartments in Indianapolis and other Midwestern markets. With just under a decade of experience in the real estate industry, Sterling w...
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    Katie Rogers from Santa Barbara, California
    Replied over 3 years ago
    How about a list of scenarios for which you should have a contingency plan?
    Sterling White Rental Property Investor from Indianapolis, IN
    Replied over 3 years ago
    A couple that we have: 1) Buy out provisions. In the event one of the partners decides to sell their ownership. 2) If a partner commits an unlawful act. Then the other partner has the right to fire that partner for such a behavior. 3) How decisions are made between both the partners. Its a 50/50 vote with us. Ex: when hiring an employee we both have to agree These are the main ones. Hope that helps.
    Ryan Cameron Investor from Philadelphia, Pennsylvania
    Replied over 3 years ago
    Wow, I just started a forum discussion on this very topic (I’m contemplating a partnership), and then boom! I see this in my Dashboard. I second the comment above, what scenarios should you (did you) plan for?
    Sterling White Rental Property Investor from Indianapolis, IN
    Replied over 3 years ago
    See above comment. Let me know if you have additional questions.
    Jaclyn P. Investor from Groton, Connecticut
    Replied over 3 years ago
    Do you have an example of your partnership agreement that we could look at for guidance when writing our own?
    John Mathewson from Schererville, Indiana
    Replied about 3 years ago
    Loved the article. Partnerships are a necessity in real estate you have to learn how to make it work.