Posted by John Corey on May 13, 2006 at 07:03:36:
Partners can be fine when handled correctly. How you handle it correctly is the question.
Two observations for those still reading this thread.
Partners where there is a high degree of shared control is difficult at best. You are agreeing to work as one on all the fine details. With any refurbishment there are so many little decision to make. It is almost impossible to cover everything in a partnership agreement.
People partner on deals when they lack the funds or the skills to take on the project alone. If a person needs the funding consider hard money. Assuming a 50/50 profit split AND that the project has decent profits then hard money will cost about 1/2 what a partner will take down. Many people do not do the math or they emotionally react rather than realize that a partner is the expensive choice.
If a partner is less expensive than hard money then many times the deal is lacking in profits.
A hard money lender is a silent partner who does not care about the paint color, the texture, or if you want to sell FSBO. Just send in the payments and the HML will stay out of your hair.
Partnerships are difficult and there is a lot of joint legal liability. Make sure you have your eyes open before starting. Make sure you have done the math and there is not a less expensive solution.
The best reason to take on a partner is when you need specific skills or knowledge that the partner can bring to the table. In that case get the roles and responsibilities sorted and the legal liabilities sorted before starting.