Why Work With Partners In Real Estate Investment

This is number eight in our ongoing series on creating your own real estate investment business plan.

Teaming up with partners helps to reduce your initial investment and your ongoing maintenance because you and your partner can split the down payment and closing costs as well as the other carrying costs. You and your partner might want to form a formal partnership or a limited liability company to acquire your properties. If you each put down a 10% down payment, then you won’t deplete your cash, and you don’t have to have as much in reserve for maintenance and repairs.

You and your partner can share the costs and reap the rewards together to turn your business into a profitable venture. Or you may want a partner that puts up the majority of the money, and you do the work of finding and negotiating the deals and taking care of the renovation costs. There are many different ways to structure your partnership. The main point is having a partner means you don’t have to do everything yourself.

Strategic Autumn Meeting 2009 © by aiesecgermany

Finding a partner can be done in many different ways. If you do not have a friend or family member to go in partners with, then you may want to team up with an experienced investor.

Talk to everyone you know. Tell them you are an investor, and you are looking for a partner. Join an investment club, answer a newspaper ad or find a partner on the Internet. Just be careful to choose a partner you can trust and who is willing to do his or her share of the work. Be sure to put everything in writing to avoid any misunderstandings later.

Your time is another factor to consider. Time is money so you want to make sure you organize the time you spend finding a property, rehabbing it, maintaining it and selling it so that your investment is profitable and worthwhile. There may be occasions that you need to leave town or you may have a full-time job, live out of the area, or just don’t have enough time to manage your property. It might make more sense than to hire a professional management company to take care of your property. These are all factors that should be taken into account when making a business plan.

If you spend 10 hours a week finding and viewing properties, another 10 hours following up on leads, 10 hours managing and repairing the property and another 10 hours a week doing booking, your are working full time on your real estate business. But let’s say you already have a full-time job, then you would be working 80 hours a week. So obviously, you would need to hire an assistant, work with a Realtor and possibly hire a property manager or handyman to help you out. Put down everything on paper and calculate which way works better for you financially.

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