I sat down earlier this week with a potential new real estate investing partner to discuss the terms of our future relationship. This person did not have much experience investing in real estate, and was primarily interested in working with me because I do. He understands that he does not have to reinvent the wheel. We all learn (anything) better when someone who knows how shows us – as opposed to fumbling our way through. We typically can learn it either way, but in the case of investing, the mistakes we make along the way are measured in dollars.
He, at one point during the conversation, mentioned that he had been advised by people he trusted, not to partner on real estate. At least one person suggested that he should be in complete control of any real estate transactions. Others shared nightmare stories of partnerships gone bad. Without question, a bad partnership can be horrible.
I happen to have had very successful partnerships. In fact I’m certain that partnering on real estate, has made me more money than if I had done it by myself. Even when things in my partnerships have not gone the way I would want them to, I can’t say I have had any partnership experiences that were so bad that I would stay away from partnering.
Is that because I have been lucky? Perhaps in a way – but I was not so much lucky in the partnership as I was lucky enough to have seen good partnerships and bad ones before I went into any. I learned from the mistakes of others.
If you have spent any time at all looking into real estate investing, you’ve certainly heard just awful stories about tenants, right? But are tenants profitable? Most certainly tenants are profitable, when approached correctly. When approached from the mindset of a person who just thinks it will be easy to rent property without learning the business, very often having tenants becomes a disaster. (If you are planning on having tenants without learning how to be an effective landlord, please keep in touch with me. I’ll be happy to buy your properties at a discount when you are fed up with them.)
I found found the same to be true with partnerships. If you partner with someone just because it seems like a good idea, very often, it won’t be. But if you take the time to learn how to set up good partnerships, you’ll be very happy with most of them, and only disappointed with the others.
I wrote an ebook awhile ago that spells this out better – the advantages and the pitfalls of partnerships. If you are considering partnering with anyone, I recommend you read it. If you are against partnerships, I insist you read it. You can download the book here. You’ll need Adobe Reader to open the ebook. If you don’t have it, you can download it for free by clicking on the image below.