Are you looking to acquire real estate investments and maybe considering bringing another investor into the agreement? Then make sure you read this blog post first! Buying investment property with a partner can be a great way to invest, if you follow these 3 strategies…
They say “two heads are better than one” and that’s true in many areas, including buying investment property with a partner in Hawkinsville, Warner Robins, Perry. But remember: a partner brings benefits to the table but also adds a layer of complexity to the situation. The best way to make sure you have an enjoyable and mutually profitable investment is to discuss and agree on the following 3 strategies…
Strategy #1. Agree On What Each Partner Brings To The Table
When people think about partnering, they often first think of the money and how much capital each partner brings. However, depending on the investment, each partner might bring different things including capital, sweat equity, knowledge and experience, an existing business and/or existing relationships, and a good credit score… just to name a few. There are many ways that both partners can contribute in an investment deal in Hawkinsville, Warner Robins, Perry. Make sure it is agreed upon and in writing. Have a written agreement as to each partner’s duties and role in the deal.
Strategy #2. Agree On Each Partner’s Ongoing Responsibilities
Once the deal is acquired, they might yet be more work to do. If you’re managing the property yourself then you’ll need to figure out who does what; if you’re hiring a property manager then you’ll still need to decide who speaks to the property manager if you need to. You’ll need to decide who deals with the tenants and who deals with the Georgia taxes and paperwork.
Strategy #3. Agree On Each Partner’s Expected Return And Exit
As the property starts to deliver a return, you will need to figure out what each partner gets. Do you split the cash flow? By what percentage? Will you split the value of the property if the property is sold in the Hawkinsville, Warner Robins, Perry market? By what percentage? It doesn’t have to be 50/50 if one partner brings more to the table than another. You also need to decide on your exit strategy – for example, under what conditions will you choose to the sell the house? What happens if one partner wants to leave the agreement? This where having a written agreement comes in very helpful. investment properties can cause problems if the partner’s don’t have a good talk ahead of time. Many of our deals come from new investor that need an experienced partner to show them how to work the investment. We may go in half’on a simple wholesale deal or be a lender on a rehab. Don’t try to share roles. It is easier to invest with partners when one does all the rehab, one does all the lending, one does all the marketing and sales, etc. Two people trying to share the role of the rehabber, lender, etc. can cause problems.
Summary
Buying investment property with a partner in Hawkinsville, Warner Robins, Perry or anywhere in Georgia might seem like it’s fraught with peril but it’s really not – as long as you figure out ahead of time what the agreement will look like between the two of you. You need to sit with your partners and determine what you’re each bringing to the table, what your ongoing responsibilities are, and what you each expect to get out of the deal. Knowing this ahead of time will help erase many difficulties and misunderstandings, and ensure everyone feels fairly treated.