Partnerships In Real Estate? Good Or Bad?

In the latest article I did I said about people going into partnership situations when in real estate, especially when talking about different locations (so say a friend of yours is in the area you want to invest in.) There are of course other reasons you may want to partner:

  • don’t have enough funds for the 25% down payment
  • want to utilize the expertise of someone else
  • are scared to in on a deal by yourself (which ties into #2)
  • don’t have enough time to do all the work on your own

All these reasons are good reasons for you to want to partner. But remember that for every reason you want to partner, there are probably 3-4 reasons why you wouldn’t want to partner. For example, if you don’t have enough funds, are you sure you want to get into real estate? Money and financial success if often an indicator of how business oriented are you. So if you lack the funds (say you don’t even have $100,000 to invest) then you need to bee up your business skills. Because whether you like it or not, real estate is 70% business (some people will argue and say it’s 100% business but I want to be more conservative.) So make sure real estate is something you need to be doing right now (versus getting a real estate education.)

If you are looking to partner because someone knows more than you do (and you aren’t willing to learn it) then there is a problem in your motivation and reason for doing what it is you are looking to do. Honestly, in real estate there is no space for laziness. So if it’s something you are too lazy to learn, then get out of real estate before it’s too late.

Honestly, I won’t go down the list telling you for reach that there is a reason you wouldn’t want to partner. But what I’m saying is be careful and be consistent in your research for this. It’s not a one time thing that does’t matter if you make a mistake in. And in no way am I saying that you shouldn’t partner with others. In fact a few of the greatest real estate deals were made with partnerships. With a partnership you can reach much larger markets and much larger properties. So I greatly recommend them. It’s just that I don’t feel like you should go out of your way, unless there is a serious reason for doing so.

What happens with partnerships (and I guess that is kind of the reason so many people are attracted to them) is you just want to get some weight off your back. And again: that isn’t necessarily bad, but if you are doing so in order to waste more time in areas that won’t bring in money, then you are wasting your time. You need to be serious and very pro-active. I guess the point I’m trying to make is: partnerships should be a way for you to go to the next level…not fall to a level beneath you. And although you may be at the edge of your seat and at the tips of your toes, your partner may be the lazy one. That is an extra concern and something you should also watch out for. So many times partnerships are really more headaches and trouble than you need.

So think twice and wisely about such partnerships. Weigh the pros and cons in each case. I honestly hope you get something going that will be beneficial. Let us know how it goes!

More later.