My current real estate business relationship is truly a match made in partnership heaven.
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 life current partnership.
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 towards that.
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 skill sets — that makes one of you unnecessary. 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 thrive at, 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.
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!