As your investment portfolio grows, you might be considering partnering on a deal or two to have the ability to invest in bigger and better properties. Creating partnerships with other investors can open many doors for you, but you need to be smart about who you choose to work with. In our latest post, we will discuss ways to create a successful partnership when investing in Chicago real estate.
You can accomplish more with a partner than you can on your own. While this is often true, you have to make sure you are working with the right partner. Just because you are friends or because you really like the person, doesn’t mean you should invest with them. Just like you wouldn’t want to live with all of your friends, you shouldn’t invest with all of them either. Here are a few things to consider before forming an investment partnership in Chicago.
Goals that go beyond simply wanting to invest or make money. What does the long-term look like? What about the short-term? Do you envision similar strategies to get there? You and your investment partner should have similar goals and the desire to go about investing using similar methods. Do you want to flip homes? Hold them? Rent them? All of the above? Make a plan with your partner and stick to it! When the right two people come together, amazing things can happen!
Well kinda. Think about multiple, plausible situations and discuss how they will be handled. Life throws curveballs, and one of the partners might need to sell their stake in the property. How would this be handled? A sale of the property? A buyout? And if so, how would the property be valued?
Don’t Make Any Promises
You can provide analysis of the property and market trends but never guarantee a monthly profit. If your numbers should come in low, your investment partner is bound to be disappointed. In fact, promise less so they are surprised, not disappointed. Under promise and over deliver.
Talk About Everything
Do you have a pipe leaking in a rental? Your partner might have a neighbor who is a plumber. Not only will open communication help you to better resolve problems, it will also keep both you and your partner on the same page. You should be open and discuss everything that arises with the house. You don’t want something to happen (the building floods) and your partner never knew there was an issue until the basement was a lake.
Life can throw things at you that you aren’t prepared for. Whether it is in your personal life or an issue with the property itself, be understanding and don’t ruin a friendship over a real estate investment. If you are investing with someone close to you, make an agreement that if things start getting messy, you sell the property right away.
Get It All In Writing
Hopefully, you and your partner are on the same page and no disagreements arise. However, if something does, you will want to make sure you have the parameters of your agreement in writing. You will want to lay out the details and what will happen should certain scenarios arise. By having it all in black and white, there shouldn’t be much room for contention!
For many people, forming an investment partnership in IL is an excellent way to own a piece of a property they likely could not have owned on their own. Make sure you have found a great buyer than give us a call to discover the best investment properties in the area!