Partner Shopping? Here’s What to Look For

There are lots of benefits to working with a partner when investing in real estate. Partners offer a brand new perspective, their own wealth of knowledge and experience, and most importantly, money. When you’re working with a partner, you’re not the only one ponying up the cash for property, meaning you’ve got less at stake and more buying power. Granted, you’ve got to share the rewards, but that’s just part of the package deal.

Picking a partner isn’t a task you should take on lightly, though. When your livelihood is on the line, you want someone you can trust and depend on, and who you know will handle their share of the work. These are the non-negotiables I tell new investors to look for when they’re considering an investment partner:

1. Trust - Trust is the single-most important element when you enter into a partnership with another person. If you don’t have trust, you don’t have anything. You must have 100% confidence that your partner is honest and trustworthy, because you’re sharing profits, debts, responsibilities and more. Your financial business is their financial business and vice versa - at least in terms of the shared investment. Make sure that you can trust this person implicitly before making any agreements regarding a partnership.
2. Expertise - It’s also a benefit to partner with someone who knows what they’re doing. I know that everyone needs to start somewhere, but partnering with a complete noob is not usually a good idea. Someone with a bit of background knowledge and field experience can offer the advice and perspective you need when making real estate deals.
3. Capital - They gotta have money. This is mandatory. I’m not saying they need to be mega-rich or anything like that, but they at least should be ready to put up part of the funds necessary to purchase and maintain the investment.
4. Work Ethic - Good work ethic is another non-negotiable. I’ve seen instances where partnerships have been utterly destroyed because one person isn’t pulling their weight. Resentment builds, tempers explode, and the partnership ultimately crumbles. Obviously, this isn’t a situation you want to find yourself in, so make sure that whoever you’re partnering with has a good work ethic. Make it clear from the get-go who is responsible for which tasks, and what the plan of action is if someone stops doing their share.
5. Chemistry - Lastly, you and your prospective partner need to have good chemistry. If you don’t work well together or your personalities clash, there’s no point in moving forward. Remember, you’re tying yourself to this person in lots of ways - financially being the most important - and you’re going to be spending a lot of time with them. If you can’t stomach them for more than an hour, then keep looking.

Bottom line when selecting a partner for your real estate ventures: choose wisely. Don’t rush into an agreement simply because you’ve known the person for 20 years or they have the kind of capital you’re looking for. Slow down and make sure that you and this person will have the right fit. Remember that partnerships don’t form overnight. Once you’ve found “The One,” the relationship will still grow and evolve. Keep communication open and honest, keep your goals and expectations aligned, and your partnership will go much smoother.