If you just entered into a real estate partnership or are considering entering into a new one, there some important things you should and should not do in order to make the most out of your new investment partnership.
To make your life easier, I’ve put together a quick list of the do’s and don’ts that will help you make the most of your partnership and boost your profits.
What you should Do:
Make the most of your partnership – Before you enter into a real estate partnership make sure your partner brings a skill or asset to the relationship that you don’t already have. Far too many people get into an investment partnership that doesn’t actually provide any tangible benefits. Whether it’s access to capital, real estate experience or a strong network of contacts, make sure your partner brings something to the table so when it comes time to split your earnings it’s actually worth it.
Set common objectives – Before you sign on the dotted line make sure you have a honest conversation about your top priorities. For example, before you buy a property both partners should agree about how long they want to hold onto the property before they sell, or how much they are willing to spend on renovations. Having the same objectives before you enter into a real estate partnership will help avoid disagreements and conflicts further down the road.
Do your due diligence – As I said in my previous blog, the biggest decision you’ll make is finding the right investment partner. In order to do this, it’s critical to do your due diligence and research to make sure your partner compliments your skills and can be trusted.
Define your roles and expectations – One of the most important things to do before you enter a partnership is to define each partner’s roles and responsibilities. By delineating who is responsible for what, you will help mitigate conflicts and misunderstandings”
Conduct a self-evaluation – As important as it is to vet potential partners, it’s equally as important to evaluate yourself so you are aware of your own strengths and weaknesses. It’s important to be honest with yourself when you do this, so you know the type of partner you are looking for.
Communicate – Regular and effective communication is key to a productive relationship. By creating strong communication channels, it will help you avoid conflicts before they get ugly and even allow for respectful disagreements.
What you shouldn’t do
Don’t rush to form a partnership – Part of finding the right partner is doing your research and due diligence. In order to do this properly you need to take your time. Finding a good partner takes time and energy, so don’t rush this important step.
Don’t over promise – Everyone in a new relationship wants to shoot for the moon, but it’s far better to under-promise and over-deliver. If you constantly over promise and fail to deliver it will lead to disagreement and a breakdown of trust.
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