Rookies partnering to do STR

[Nick Bandiera]

Hi all!

I am currently enrolled in the Real Estate Rookie bootcamp where we are evaluating our strategy to begin investing. I have a potential partner who I used to work with and we compliment each other well. We are thinking about doing Airbnb to start but from my learnings, I gather that this strategy is not always the best place to start as a rookie. I also am curious how partnerships work for STRs, can you do STRs under an LLC? I appreciate any advice on getting started and what to think about if this is the route we go.

Thanks,

[Don Konipol]

Quote from @Nick Bandiera:

Hi all!

I am currently enrolled in the Real Estate Rookie bootcamp where we are evaluating our strategy to begin investing. I have a potential partner who I used to work with and we compliment each other well. We are thinking about doing Airbnb to start but from my learnings, I gather that this strategy is not always the best place to start as a rookie. I also am curious how partnerships work for STRs, can you do STRs under an LLC? I appreciate any advice on getting started and what to think about if this is the route we go.

Thanks,

I would advise against the partnership route.  Although new investors who are “scared” about making or managing the investment find solace with other new investors, it is a crutch that brings an unneeded dynamic to the investment.  All of a sudden you’re only 50% in control of your money and assets, and in a 50-50 partnerships can’t make a move without the other persons approval.  What happens even if the investment is successful and you have to sell after say 4 years, and your partner won’t sell?  You may end up in a stalemate, a lawsuit, or selling you interest to him at a large discount.  Imagine how problematic this could be if the investment is not successful.
Partnerships CAN be successful and worthwhile.  But only when the parties have experience and knowledge to “know what they don’t know”.  Partnerships undertaken for comfort have the same success as people who marry just anyone because “they don’t want to be alone”.  Partnerships work when there are solid benefits to both parties, not emotional responses.