I was approached by a contractor who I've had a personal relationship before business. The GC is near my age and we've known each other for many years. He owns a business that handles rehabs and construction for big commercial chain stores and brings a great deal of expertise in that area. He is also 100% trustworthy.
We recently broached the subject of a potential partnership with RE. It is something he had been wanting to get into, but he lacked the knowledge or time of finding properties, running numbers, etc (something I love to do). The idea spurred of potentially creating a partnership where I handle the RE side of things and he handles all of the rehab side of things. The arrangement is appealing because the rehab would be 100% hands-off for me and his existing business already has the capabilities of making countertops, cabinets, etc. A good bit of vertical integration (yay business school terms!) that can assist in RE projects.
Beyond the obvious things like having everything in writing, explicitly stating what each person's roles are, etc -- I would be curious to hear from others.
What would your ideal GC partner bring to the table in a partnership arrangement?
Don't really have time for a long reply right now, but I want to make one point. Partnerships are hard. I've done several. It's very much like a marriage - and we all know that even successful marriages take a lot of maintenance.
You say he's 100% trustworthy. He's not. No one is. I'm not, you're not, he's not. Even if you're both trying to be 100% honest, you'll still understand things differently, bring different assumptions with you, remember conversations differently, and so on.
The best advice I ever got was to not only clearly define roles of the partnership, which is hugely important, but also to clearly define, up front, how each of you can exit the partnership: what are the financial implications, responsibilities of the exiting partner, and so on.
I've had one partner whose day job suddenly doubled in workload, leaving him unable to contribute to our efforts. I've had another partner who looked great on paper, but turned out to not be able to deliver once we actually started the business. In both those cases, having a predefined plan for terminating the partnership saved a lot of messy arguments and potential financial loss.
Good luck with it!
Thanks for the reply. A lot of good takeaways there and the exit strategy is definitely something that I will keep in mind if I move forward with things.
@Micheal Hayworth, thanks for that advice. I have been exploring the same option with a good friend (contractor) and in my case we are in different states so that actually would have complicated matters. I'm thinking now of not even starting any partnership with him which would otherwise have the potential of even marring a very good personal relationship.
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