Real Estate Partnerships

To partner, or not to partner? That is the question that many real estate investors find themselves pondering at some point or another. Entering into a partnership with another investor is a serious decision, and one that requires a great deal of forethought. When you partner, you can gain several unique advantages that a single investor cannot achieve on their own. However, there can also be some setbacks that you wouldn’t experience as a sole investor. So, should you do it or not?

Why Partner?
There are a few reasons why people even consider partnering on a real estate deal. The two most common have to do with finances and experience. Some investors simply don’t have the capital they need to get started, so they pool their resources with another investor. This is actually quite common, and a great way to get your foot in the door and start building experience. Lack of experience is another reason many go into a partnership. If you’re completely new to property investing, going into a deal with a more seasoned investor is a wise move. You have an experienced person to learn from, and someone who can help you avoid some of the more common newbie mistakes.

Benefits of a Partnership
Whatever your reason for considering a partnership, there’s no denying the benefits that come with one. We already touched on one of the best, and that is the ability to bring together resources from multiple sources. These resources may include money, experience, skills, etc. When everyone involved is contributing some, no one person has to do it all. Another advantage has to do with the labor division that a partnership brings. Instead of you tackling the entire workload, you can split tasks with your partner. This is a huge time-saver, and you know what they say – time is money. Finally, partners can provide just the boost you need when the going gets tough – and in this business, chances are it will at some point. Having a partner at your side who is fighting the same battles as you, whether it’s vacancies, an economic downturn, or an unexpected house repair, can ease some of the burden during these tough times.

Drawbacks of Partnering
Partnering in real estate isn’t without its disadvantages, though. There are thousands of investors out there who prefer to fly solo, and they’ve undoubtedly got a good reason for it. One of the most common drawbacks has to do with personal relationships – namely, the one between you and your partner. When you work this closely with someone, you get to see all sides of them – good, bad, and really ugly. Before joining forces, make sure you’re confident that the two (or more) of you will be able to maintain a good, professional working relationship. Another possible drawback is that you aren’t in full control of the investment. Any decision about the property will need to be discussed, and a consensus reached before proceeding.

Think carefully before you decide to partner with another investor on a real estate purchase. It’s a big step, and you should absolutely weigh the pros and cons against your unique situation before arriving at a decision.