Apr
23

When Should a Real Estate Investor Use a Partner?

Filed Under Real Estate Investing 


Many new investors are looking for a business partner when what they really want is a friend… that is, someone to talk to. And, partnering with the wrong person could be a monumental mistake for your business.

The first question to ask yourself is, “Why do you want a partner?” Here are two valid reasons:

  1. To overcome our shortcomings. This includes:
    • Knowledge
    • Money
    • Skills
  2. To divide the workload or risk.Unfortunately, most people ask somebody they “like” to go into partnership. On the surface it seems like a good idea, but is it? What does the other person bring to the table? Do they have something you don’t?

If all candidates possess the same or very similar skills (plus a smile), then you probably don’t need them, and they don’t need you. But, if you have the knowledge and time, and they have the money, then that’s another story.

Before you partner, make a list of each person’s strengths and weaknesses to ensure you complement each other. Two people that like each other and have the same skill sets are actually likely to have problems working together. Why? Because both people will want to do the same things, avoid the same tasks, and think they could do the other person’s job better. But, two people with different skills will work together well because both people will be working on their strengths and their partner covers their weakness.

When you look at most people’s real motivation for a partnership, it is often about money, or lack of it. In these cases, you would be much better off to find private financing on your own versus forming a partnership with someone who is broke.

In the Ultimate Real Estate Investing System we talk about obtaining private money and have a simple system for getting it. You might want to review private money options before getting into a partnership you’ll regret. If you do get into a partnership make sure you have a written agreement!

Author: Gerald Romine

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