Partnership Horror Stories
I would have to say that I am very very lucky because I have partnerships now that work amazingly well like marriages made in heaven. One of my current partnerships is with someone who I could literally chat with for hours on end on the phone. I have another partnership where are so in sync that it's like we can independently make 10 moves and compare notes and we'd make 9 out of the 10 same moves. I would say that many of my partners are the most creative, go-getter type, intelligent and most contribution minded people that I have ever met in my life.
But for every one partnership that has worked out amazing, there have been about 4 that did not work. Here are the horror stories over the years.
1) I had a partner that died in a drowning accident and he was only 32. That is quite the saddest thing one could go through. I had loaned him $50,000 so he could buy shares in a Hollywood media company that he introduced me to. He had 12-months to pay off the loan or lose his shares as the underlying collateral. About two weeks prior to the loan coming due, I get a call from him all excited that he had the money and was ready to pay-off the loan. Then he died in a freak accident. If that wasn't traumatizing enough, imagine the look on my face when his parents initiated litigation against me. It never went into litigation but they thought I was trying to take his shares in this media company. After many rounds of lawyer conversations, it all eventually got sorted out. Amazingly, in my life I have never sued or been sued. Well, except some brand names that I owned that Warren Buffett's company said infringed on their brand. That doesn't count (and I had to sign something that I would never reveal how much money I walked away with).
2) I use to be the king of the short sales in 2009 until they passed some laws that basically made going after pre-foreclosures very risky. In this partnership, I went away on vacation and when I got back found that the partners decided not to pay me about $60,000 in distributions.
3) I have been in partnerships where I basically did 95% of everything. That situation sucks. Have been in partnerships where we are supposed to split the cost overruns and holding costs 50/50 but ended up having to pay it. Often in partnerships you may have different agendas like one wanting a quick profit and the other wanting the tax advantages of a long term buy and hold. And of course there has many partnerships where we just see the world differently and have different values. There was one partnership where the partner was amazing at finding deals but horribly organized and terrible with money.
4) I invested in a company (not exactly a partnership) that did really well making $80,000/month in revenue in year 2. The CEO never had much money before and starting partying with girls and then started taking heroin. You can imagine the rest. He ended up taking money from clients and I spent about $250,000 out of pocket cleaning up the mess.
I have the fortune to have made millions of dollars and have always been action oriented and willing to test out new partnerships. Ultimately, I believe partners are a reflection on yourself. Are your partners contribution minded or hustlers? The answer is probably a reflection on who you are. I have seen amazing personal growth in myself over the last sixteen years and now believe I enjoy high quality partners because I have evolved as a contribution minded person.
You're not going to succeed in real estate unless you go through massive failure. Failure makes you a better person and as a real estate entrepreneur you learn on the go.