It sounds impressive to tell someone, “Everything looks good, but I want to discuss this with my investment partner before we move forward.” Beyond making your investment company sound a bit larger, there are some real benefits to having a collaborator.
There are times when it makes sense to partner with someone, and there are other times when it brings more aggravation than it is worth and can damage friendships.
When an investment partner makes sense
There may be times when you find a great deal but do not have enough cash available to buy it on your own. Perhaps you do not want to extend yourself further financially or take on a lot more debt at that time. If the only way you can make the transaction happen is with the additional resources of a partner, it makes sense to take this route.
Work-life balance
Having a partner can free up another valuable commodity that you have in limited supply: time. Real estate investing is demanding, and novice investors can quickly become swamped. Being rich with money is great, but if you spend all your time earning it, you discover that being money rich and time poor is more stressful than satisfying. A partner can help you maintain a proper work-life balance by sharing some of the duties and responsibilities.
A partner may also bring something to the deal that you lack. If you are a creative person, you most likely need someone logical and detail-oriented. Novice investors can benefit from a partner with some established connections. However, for a true partnership, there must be balance in the equation. They can’t feel as though they are carrying you and must appreciate your strengths and contributions to the partnership.
A partnership can become a sinking ship
Working with an investment partner is something you should be very careful about. Do not feel obligated just because someone is a friend who wants to make some extra money. Each person must know what is expected of them upfront. Both parties should have the same level of commitment to the real estate deal. In addition to knowing their strengths, you should also be aware of their weaknesses and how they handle difficult situations.
If you do not really need a partner, there is no reason to get one. It is much easier to decline partnering with someone than it is to deal with the aftermath of a partnership gone wrong.
Be smart about who you choose to partner with and only do it if it will benefit the real estate investment you are making.
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