Hello BP, I am a new member also a new to the real estate game. I love the forum section of this site because of all the members help. I currently own a single family house in south Florida that I live in. My goal is to start investing into single family homes and multi unit properties. I want to try to buy 1 or maybe 2 per year.
The question I have is, I have two other investor friends that want to do this with me, but I'm hesitant. Partly because I want to grow this on my own and build passive income quickly. I feel like it I have two partners the return would be way less. On the other hand we can invest in more properties and increase cash flow with all of us.
What should I do? Has anyone else been in the type of situation? Is two partners too much?
Thanks for the feed back!
Tough situation. There are pros and there are cons, you will have to think it through and decide. If you decide to move forward with a partnership, make sure you have an agreement in writing and that everyone know's what their individual responsibilities are going to be (so that one partner is working more than the other partners, etc.).
The more partners the more chance there is for disagreement. Even with one partner make sure everything is in writing, including the exit of the partnership. Does anyone in this group have any experience. It would be better if you can partner with someone with experience to the blind won't be leading the blind.
As far as spreading your fund over several deals that is a good hedge for your funds.
Make sure everyone is on the same page. Partnerships and friendships end when deals go bad.
It's true partnership can lower your individual returns. A good partnership should have a multiplying effect due to everyone bringing unique skills and strengths to the table. Make sure you understand each of your unfair advantages and leverage those.
Nick...this is another question where the answer is as personal as the type of underwear you prefer. ;-) Consider forming a partnership like a marriage. Are these people you can stand to deal with in good times and bad? There will be conflict, but are you guys able to deal with it in a healthy way? Do you have similar core values...meaning, do you make tough decisions using the same moral compasses? I could go on, but I think you get the point.
I have a partner. It's my sister. She is also my best friend. We definitely don't always agree, but we respect each other and approach those disagreements from a logical, non-emotional point of view. We decided up front, and wrote it into our operating agreement (Yes, I have a formal 15 page operating agreement with my sister.) that all decisions must be unanimous. We deal with differences of opinion, but when either of us has a real doubt, we just don't do it. We trust each other to handle our own parts, and we clearly define those parts, so we don't step on each other. We also keep the other looped into what's happening with our part, in case one of us has to fill in for the other. Basically, we operate as though we were working together. ;-) the difference is, in my 9 to 5 job, my personal reputation is not on the line, when my coworkers make decisions and do things. When my sister and I speak or act, the other's reputation is at risk as well as our own. She is one of the only people I have that much confidence in.
I would advise you to consider these things as you contemplate what makes sense for you personally. The math is the easy part!!
Thank you all for the advice these are all great points of view. I'm still not 100% decided on whether to use two partners. I will have a clear discussion with everyone and take it from there. If we are not all on the same page I will proceed on my own. Maybe invest in the 1st one then bring on a partner, Lets see what happens. I know for sure I will be investing with or without partners!! I have goals..
It's also a question of whether or not you can afford it on your own. If you can, then go for it. If you can't afford it on your own, 10% of something is better than 100% of nothing
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