For those who know me and my family, you can easily guess my answer to the question, “Should family members go into real estate investing together?” Our business was formed as and still remains a family affair. Although it has worked well for my family, there are many instances where this is just a bad idea. Lets talk about it:
You need 3 things in place for this to be a good idea:
1. There must be a long-standing, healthy relationship between family members involved. If your relationship has had a tattered past and is not fully healed, don’t believe for a second that a successful business will be the salve that heals. Every old wound will be opened and dealt with under the immense pressure-cooker of a fiscally tied business relationship. Any family member that you might consider needs to be one that you have had a solid & healthy relationship with for years.
2. Before setting sail, every role and expectation needs to be CLEARLY defined. You are not organizing Mom’s 50th surprise birthday party here. You are starting a business that will affect the lives of those involved for years to come. If you want to have a serious business, you need to start with a serious mindset. Talk about every aspect of the business you want to begin. Look at the business from every angle and leave no rock un-turned. “What-if” your business until you run out of what-ifs! When these what-ifs become reality, you will be prepared and on the same page.
3. Each member has to have a passion for the aspect they are taking on for the business. Enough said, no passion = no success! Our family is passionate about our business. We genuinely want to help our customers stop foreclosure in Austin and help sell their homes quickly and fairly.
Why you don’t want to enter a business relationship with a family member:
Convenience… Most people have the tendency to work with others out of convenience because they have a resource or talent or ability that is needed to accomplish the business goal. Not a good idea. Here is an example why:
John’s brother Jimmy is an excellent remodeler. John wants to flip houses on the side while keeping his full time job. John has the finances but needs someone to oversee the remodels and Jimmy his brother would be a perfect fit…. except for the fact that Jimmy is very undependable and has a reputation for “disappearing” for days at a time. John hopes that his brother will suddenly get it together and help launch his dream of flipping houses. This is a dangerous path! I would suggest giving Jimmy a trial period before going into an actual partnership. If Jimmy performs like history has shown, their relationship will be stressed and potentially damaged. It just isn’t worth it!
In my opinion, family is more important than business.
Let’s face it, most relationships are damaged or strained because of some sort of financial event. Families are destroyed by greed and financial abuse quite often. Real estate investing ultimately, is about making money, so there is a great chance of the relationship being strained or destroyed in the end. This needs to be discussed, thought about, etc! Please do not casually enter a business relationship, especially real estate investing, with a family member. Consider the 3 things above and potentially save yourself a lot of heartache and trouble!
My family business is composed of:
Me – General Contractor, Marketing, Buyer/Negotiator
Wife – Realtor, Marketing, Moral Support
Dad – “Money Man”, Marketing, Back-up GC, Wholesale Negotiator
Mom – Creative Genius, Marketing, Interior Decorating, Staging Expert, Moral Support
Through this business relationship, our family has grown closer and we talk to each other every day. So, my personal answer to the question, “Should real estate investing with family be done?” is YES!