Working together with people who have already been investing in real estate is a very good way to start your own investment. 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 choosing who to work with, make sure that they are people who will work hard, and who share your knowledge, drive, and commitment. It isn’t about who you like the most (although it is part of it). Many people like the idea of partnership, but they are really only interested in the idea of rewards. Will the people on your team work with the same drive month after month? Will they be able to make their financial obligations? You are going to want to screen people carefully and put all expectations in writing.
Before joining some partnerships or clubs, you may have to pay a hefty entrance fee. This turns away people who are not serious about moving forward with a successful investing partnership. It is still possible that you will deal with people who, even after paying high entrance fees, become lazy over time. You must have a plan in place for handling partners who are not pulling their weight.
How do you find them?
You probably already know many people who would be interested in an investing partnership. Put the word out that you are looking for people to partner with. Take your time to go to networking events, and even have your own meetings where you can explain and discuss the benefits of the partnership, and what you want to accomplish. The hard part is making the partnership work and maintaining it in the long run. You will have to choose how many investors you want to work with. If you work with too few, you may find it hard to gather enough funds to make substantial investment. If you work with too many, there will be fights, and it will be very difficult to manage overall.
Define what you want to invest in.
Have specific goals in mind, and outline what each member of the needs to do to get you there. You should decide which types of investment you want to make, whether it’s land, commercial properties, or multi-family homes. There are also niche markets, industrial properties, mobile homes, and other types of property you might be interested in as well. You will want to determine if other property types will ever be taken into consideration.
Set up and structure payouts.
You have to structure how everything will be done. Profit should be divided according to the amount each person puts in. What contributions will be expected monthly? Is there a cap? You also have to consider administrative costs, and set aside money for things such as making copies, filing fees, repairs, etc. You should have a meeting to discuss all of this in detail, and define what is covered and what isn’t. It is important that each person understands the structure. Cover all scenarios, such as: new people joining, people leaving, and how you choose what to invest in. Your property standards should be black and white, and always adhered to.
This is business.
Remember that this is business, and you should handle it that way. Create an operating agreement, pay your taxes, and consult an accountant and a lawyer. It will help you in the long run if you have everything in order. Make a decision on the type of partnership you want to form, whether it is general partnership, an LLC, or a limited partnership. If you are unsure of the type to use, talk with professionals to help you find out which one is suitable for your team.
But 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!
Are you ready to invest in College Station? If so, we are ready to help you now! Send us a message, and let us know what you’re looking for, or give our office a call today!