Be prepared when taking on a partner for real estate investing.

Whenever you get a partner for anything, both parties have to be in complete agreement. I learned this lesson the hard way when I took on a partner, there were a great deal of misunderstandings and confusion involved. I will go into specific details in a later article. The biggest thing that I learned is to get every detail agreed upon and most importantly get these agreements in writing. If I ever do take on another partner it would be a good idea to have a lawyer write up these details for me in some kind of contract. The following are some tips that I learned from my past experience.

Get a lawyer to write up agreements.

Write out everything that you can think of as far as responsibilities no matter how small.

Understand what “jobs” go with each partner.

When you take on a partner each partner has specific strengths and weaknesses so this would be a good time to assign jobs based on those strengths.

1. Who is going to handle the Bank payments or financing if any.

2. Who is going to be responsible for handling the utilities.

3. Who is going to handle tenant relations if renting.

4. Who is going to do minor repairs.

5. Who is going to pull permits.

6. Who is going to screen tenants or it could be both.

As you can see the list could go on into great detail depending on your situation but I would make sure that everything that I could think of was on this list to avoid problems.

Define a workday and a work week.

This may sound like a simple enough thing but it must be agreed upon before you every start. This detail became the biggest problem for me in my experience with a partner. When your rehabbing a house there are going to be a lot of workdays and they have to be in sync or one partner will start to build up considerably more hours than the other. Just a hour a day will turn into 5 hours a week that has to be made up by the other partner some time when your not there. This used to drive me crazy with my partner because he would always come late every day. He would just say he would stay later but he always seemed to have somewhere he had to be at a certain time. If I ever do have a partner there is going to be some kind of payment for each hour that one partner works longer than the other. This way there will be no problem with one working longer than the other. So basically I would set up a workday which would have a specific start time and ending time as well as a work week that had a specific amount of days.

I think all in all if you write everything out and get along great with a person you could have a good chance at success with a partner. But remember people work differently than others and they do not think the same way so something that may seem obvious to one person could be no big deal to another. I really don't think that I will ever get another partner again unless it is some kind of silent investor who gives a sum of money to work with. If I ever was going to work with someone in a different capacity I would have every detail worked out beforehand.