Say you found a really good deal, and you are starting out or have many years experience in investing in rental properties via self management or using the management companies. Pretty much in any scenrios.
Would you ever buy rental properties (multiple units that cost few millions) with business partner(s)? Business partner(s) can be friends/family members/spouse if you keep things as seperate properties/or through other connections?
I'm just picturing a scenrio where you have 200-700k and your potential business parter have 200-700k for down payment for 2-15 million+ multi unit properties. Is that feasible? Would it be good to make it as a living trust or under corporation to have enough for expenses and distribute rental income?
OR never do that and just keep it small until I can purchase it on my own?
@Ho Eun Park this is a challenging question indeed. I personally ended up buying my last two Berwyn apartment deals with partners. Both times I would not have been able to afford to invest in the opportunity myslef, so partners were the only way I could get into the game. Partnerships are kind of like a marriage in that over the years you learn a lot about a person. The positives are that you get two different skill sets that allow you to see opportunities and think more strategically. You also have someone to bounce ideas of off.
The negatives could outweigh the positives in some cases. If your partner is not ethical you could have real issues, and there is also the possibility for one partner to not pull as much weight as the other partner. I have fortunately not run into this issue, and feel blessed to have had partners thus far who are smart and hard working, but I am keenly aware of how miserable things could be if a partner was not good.
The last thing to think about is the "roles and responsibilities" of a partnership. If you are using 3rd party management this will be a non issue in most cases. My partner and I chose to self manage our 9 unit, and we are constantly re-evaluating roles and responsibilities to make sure both partners feel like they are not doing too much of the load.
I think the only right answer is whatever the best answer for your particular situation is. Whether that's the buying logistics, what the returns can be with a partnership, and someone's own comfort levels or desire to deal with partners. And, the quality of your partner makes a big different.
I have a partner on some of my properties. It's great because I essentially have infinite returns on those properties, but it's also a pain to do his statements every month and now I have to share my [tons of] equity with him. If I could do it over, I'd have bought them myself. But these are just SFRs. A bigger higher-budget situation might be very different.
Not sure if this is geared towards a big enough scale you're thinking of, but might help with some considerations-
Hope that helps!
@Ho Eun Park have you explored syndications?
Of course you have to qualify as an accredited investor for most, but if you do qualify it gives you the opportunity to get into bigger deals/more units that you otherwise would not be able to accomplish or afford on your own.
You'll also be a limited partner in syndications, i.e. no active role in managing the property, so you'd have to be okay with that as well.
Just food for thought! Here is a blog on syndications if interested: https://www.biggerpockets.com/blogs/10191/68640-wh...