protecting your investment when partnering with other investors

1 Reply

Hi guys,

I'm very new to BiggerPockets and this is my first post! Exciting times :-)

I'm curious to hear about your experiences when going into partnership with other investors. What is the standard protocol when you pull funds together with other investors? Do you have a contract drawn up and checked by the lawyers of all parties involved? For instance, if I was to find a good real estate deal and I convinced another investor to contribute 50% of the  funds, would I have to provide a contract to basically say I wasn't going to steal his money?

Thanks in advance for your replies!

Cheers,

Steve

Welcome to BP, @Steve Jones ! Partnership is always a tricky beast, and there are no real standard protocols to rely on. All partners need to be adequately protected against circumstance but also just as often against each other. For example, if you found a great real estate deal and convinced me to contribute 50% of the funds, I wouldn't be interested in any contract from you promising not to steal my money: I'd want a secured interest in the property, likely in the form of a promissory note (describing the terms of the loan) and a recorded security deed (pledging the property as collateral for the loan). That way, if the partnership goes sideways my investment is protected in that I can enforce my note (receiving payments on my loaned funds) or foreclose on the property to obtain ownership.

Are you planning to invest here in the States?

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