Posted by Ronald * Starr(in No CA) on August 29, 2003 at 24:32:20:
In real estate investing, I generally recommend not having partners. It is hard to have a good one. However, when they work well, they are wonderful.
Real estate is an enttrepreneurial activity. This is the opposite of partnership activity. You have to follow your own path as an entrepreneur. Having two people running the operation means that you are trying to go down two different paths simultaneously. Usually they are in conflict.
Even a somewhat forceful person will get into conflict with partners. The type who are headed for success are very likely to do so.
When I had my first partnership we agree that all decisions had to be by mutual agreement. We never did anything that one of the two people did not want to do. Unfortunately, my partner got tired of real estate investing and wanted to sell all our properties. That was a set-back. We are still friends, and we didn’t even know each other hardly before we teamed up. But the problem of peole dropping out of real esal estate investing is very real.
What I suggest is that the proposed partners sit down–perhaps several times–and draft a comprehensive partnership agreement. They might do so by starting by reading some books on partnership agreements. There are some law form books on partnership agreements, discussing the many issues that need to be addressed. So you start at a law library, probably.
If you can successfully draft a partnership agreement, you probably can operate a partnership business. If you can’t draft, you don’t go forward together.
Talking with others about real estate is nice. Thus, one major draw of this CREONLINE.COM website. Instead of partnerships, I like the idea of “work sharing.” Each person owns his/her own properties individually. The people help do the labor required for the other person’s property: painting, fixing the blumbing, etc. Then the helper can call on the other person to help out in the future on her/his property. Talking about each other’s deals is also nice. But not owing them together is the key here.
Good InvestingRon Starr