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You are here: Home / Investing / Pros and Cons of a Real Estate Investment Partner

Pros and Cons of a Real Estate Investment Partner

April 24, 2016 | Leave a Comment

Investing your money to build wealth is a great way to help you toward a more secure future. There are, of course, several different ways you can invest your money to help you toward such a goal. If real estate investing interests you, it may help to have a partner when you are getting started. But, as with many things, there are both pros and cons of a real estate investment partner.

Pros:

1. Down-payment

If you are new to investing and have decided to invest in real estate, it can take several thousand dollars for your first down-payment. In order to have enough money, you could split that amount with a partner in order to reach your goal faster. Obviously it is an advantage for your partner as well because they get the same benefits as you – being able to invest sooner rather than waiting until they have saved enough on their own for the initial down-payment on a property.

2. Experience

Are you interested in real estate investing but lack the experience necessary to get started? This is another area having a partner can help. Choose wisely among your family or friends to ensure you are getting someone who not only has the experience necessary, but also has had success in real estate investing in the past.

3. Time

When you have a partner to invest with, you may be able to accomplish your goals more quickly. For instance, if you are investing to flip the property and you both plan on also investing sweat equity, having two of you to do the work can help you get finished faster. The quicker you finish, the quicker you can sell the property, bank the profits, and move on to the next one.

Cons:

1. Inability to Compromise

When you have a real estate investment partner, it helps make the process go smoother if you get along well with each other. Before deciding to enter into a business relationship together, talk to your family member or friend to ensure you have the same ideas and goals for the property. If one of you wishes to fix the property and flip it but the other wants to rent it out, for example, you must be able to come up with a plan that you can both live with. That may mean one of you gives in to the other about the end result. Or, if neither of you is willing to compromise, you might need to find a different partner.

2. Lack of Planning

Investing with a partner requires some planning. If you and your partner are investing to rent the property, have you planned for what could happen if you are unable to find a renter? There are ways to plan ahead for such a possibility by choosing to invest in a turnkey operation.

3. Failure to Communicate

You must continually interact and communicate with each other about what is happening to your project along the way when you have a partner. Any failure to do so could completely sink your project, your relationship with your partner, and possibly your own finances.

4. Lack of a Contract

As with any type of partnership where money is involved, you should draw up a legal contract for both parties to sign. This holds true whether you are partnering with a friend or family member. In addition, each party should have their lawyer look over such an agreement before signing it.  This way, both parties are protected in case the deal, or property, goes south.

As you can see, real estate investing with a partner is not something you should enter into lightly or on just a handshake. That may have worked for some people in the past, but to ensure you don’t end up getting into a bad situation, think carefully about the pros and cons of a real estate investment partner before you write any checks.

Our Debt Free Family
Our Debt Free Family

Team Our Debt Free Family is the administrative WordPress user account for Ourdebtfreefamily.com. Our Debt Free Family is a premium classic personal finance blog. Our mission is to inform, educate and help you get out of debt.

Filed Under: Investing

About Our Debt Free Family

Team Our Debt Free Family is the administrative WordPress user account for Ourdebtfreefamily.com. Our Debt Free Family is a premium classic personal finance blog. Our mission is to inform, educate and help you get out of debt.

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