A great way to get into real estate investing is to work with other people who have been there before. But how do you go about finding a people to partner with you? In our latest post, we will talk about how to find and form an investing partnership.
Who should you partner with?
When it comes to developing partnerships liking someone because of their personality is one thing but when it comes to doing business you need to look at a few factors.
- Work ethic
- Shows up on time
Some partnerships or clubs will charge a hefty entrance fee, with much lower payments each month. This will weed out the people who aren’t serious about moving forward with a successful investing partnership. But even with high entrance fees, you can still expect to deal with people who become lazy over time. You need to have a plan in place for handling partners who aren’t pulling their weight.
Set up and structure payouts.
Profits should be divided proportionately to the amount put in. What contributions will be expected monthly? Are there minimums? Caps? You will also need to factor in administrative costs and set aside money for things such as making copies, filing fees, repairs, etc. What is covered, vs. what is not covered needs to be clearly defined. Have a meeting to discuss this in detail Make sure everyone understands the structure is imperative. Cover all scenarios: new people joining, people leaving, and how you choose what to invest. it. Your property standards should be black and white and always adhered to.
This is business.
As such, it will need to be treated that way. Create an operating agreement, pay your taxes, consult an accountant and a lawyer. Getting everything in order upfront will help you exponentially down the road. Decide if you want to form a general partnership, an LLC or a limited partnership. If you aren’t sure, talk to a professional to find out what will work best for your team.
But most importantly have fun.
Remember, at the end of the day, this should ultimately be fun and exciting. The people you work with should bring inspiration and a positive attitude to the table. Name your business something clever and give yourself a great title. It can be anything you want. This will help to get you thinking creatively and allow you to really enjoy what you are building together!