How to make successful partnership

3 Replies

I’m building my Realestate portfolio right now at a decent pace. I’m looking to leave my day job in the next 2-3 years to focus on doing this full time. I’ve heard that it’s difficult for self employed workers to get loans. So my brother is thinking about being my partner just for the loan applications. He won’t have his hand in any other part of the business besides putting his name on the loan. I’m wondering what percent of a deal is fair to give to him?

First, I would push to compensate him with cash flow or an upfront fee before making it complicated by sharing ownership.

However, if he signs the loan and invests no cash, I'd say push for 25% ownership, and walk away if he wants 40% (unless you are really desperate).

@Zach Barber before deciding to go into business with your brother, I would also evaluate other options. Having family in your business could add another layer of complexity you may not want.

While I have not personally had any issues partnering with family, I did have an issue with a partner on my first deal. While he was not a bad person, he simply did not uphold his side of the bargain. He over promised and under delivered. I thought that I had properly vetted him, however after being in business together for a few months I realized that our values were simply not in alignment. 

Looking back however, I'm very thankful for this experience as I've learned how important it is to choose your partners wisely! My current partners and I are working very well together and it has encouraged me to work harder for them and their families in addition to my own. 

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

We hate spam just as much as you