Partnering with a Colleague on Buy/Rehab/Hold in Houston

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A colleague from work and I are interested in partnering up to build a rental portfolio. Our model will essentially be purchasing 3/2 SFR's at a discount, do some rehab, then lease them out as part of a buy/rehab/hold strategy. Does anyone have anything to share, advice to give, or interesting stories around partnering up with a colleague? Also, what is the best way to structure the ownership of each property?

Any and all input is welcome.

@Jordan Decuir ,

Good call on finding a partner to invest with. I don't know if you are plugged into the Meet-ups yet but the best advice I can give is to come out and meet others that are doing what you are planning and how to do it smoothly. The next one is on the 18th and it's free. Come check it out and get some great advice. 

Thanks @Lee Arnold

My partner and I are going to a Houston REIA meetup on the 16th. Where is the meetup on the 18th that you are referring to? We would like to attend

Come out to the Texans Grill this upcoming Wednesday by Jet Lending and sponsored by my company also.  I believe it has one of the bigger turn outs to network with other real estate investors.  

Medium logo onlyJerry Ta CPA, Propertycare, LLC | [email protected] | (713) 489‑7653 | http://www.propertycarehouston.com | TX Agent # 624354

Sounds great @Jerry Ta

What's on the agenda for this upcoming wednesday meeting?

If possible I would avoid having a partner. Partnerships can get very complicated fast.  The value of a partnership is when each member has differing strengths.  For example if you had capital and your potential partner had experience.  

There is no reason that you guys could not start your investments at the same time and learn from each other as you go.   

The key to sanity and happiness is often having many friends and connections, but no partners.   

To counteract Jad I have a partner and we own 5 homes in the Houston area. Neither one of us would be as successful if we did it alone. I do all the bookeeping, first pass at deals, documentation, tenant letters, etc. and he does all maintenance, showings, and face to face.

We'd probably break it down similarly if I live in Houston. That said I've known my partner for about 15 years and we've always wanted to work together. 

Medium wb logoKevin Wood CPA, WoodBaker LLC | [email protected] | 832‑444‑9284 | http://www.woodbakercompanies.com | TX Agent # 684674, TX Contractor # 000000 | Podcast Guest on Show #167

I agree with Kevin, every podcast and story you will read here says that it's better to have half a deal instead of all of no deal. 

Thanks for the replies guys. I think that @Jad Allen makes a valid point, and it is backed up by his personal experience so it is an interesting perspective. It definitely makes sense when considering that you and a colleague could challenge and push each other without having to form an actual partnership. So the benefits of a partnership could still be felt somewhat but without the inherent pitfalls that could arise in some cases. 

I am probably more in the @Kevin Wood and @Lee Arnold camp at this point, favoring the benefits of a partnership while also considering the potential downfalls at the same time. Perhaps I may change my tune after we actually begin the partnership however. 

Jordan

In the beginning partnerships are great.  For a beginner it can even be comforting.  However, it is after a little time passes where it gets dicey.  From experience and observation it is apparent that partnerships in long term investing are very difficult to maintain.  

In short term investing partnerships can be great.  Like flipping.  After each flip is done both can go different ways or chose to work together again.  With long term investment strategies you are often stuck with someone who has different values, goals, and plans.   

Either way I wish you luck.