Investing can be a great way to build wealth. Investing in real estate specifically is an effective way to gain financial freedom over time. For some people, however, getting started as a real estate investor can be tough. Taking on an investment partner can help, but choosing your partner isn’t something to be done lightly.
What You Should Know Before Taking on an Investment Partner: Find Complementary Skills
The nature of life is such that everyone has different skills, competencies, and knowledge. As much as you might wish it, you don’t know everything. But then, neither does anyone else. It’s this very fact that can make an investment partnership so beneficial. According to Money Task Force, one of the things you should look for in an investment partner is a skill set that works well with your own but also fills in the gaps in yours. Ideally, you both have something unique that you bring to the table so that everyone has something to offer.
Structure Your Business Properly
Because real estate investing is a business, one of the things you’ll need to take into account before taking on an investment partner is how your business is structured. Different structures mean different things for businesses, especially in terms of how they are taxed. Structuring your business as an LLC can give you and your partner some leeway in terms of taxes since the LLC itself isn’t taxed directly. Additionally, according to Freeman Lovell, an LLC lets you add an infinite number of partners. That can be a real advantage if you want to add more partners.
What You Should Know Before Taking on an Investment Partner: Friends Don’t Always Make Good Partners
It can be tempting to go into a partnership with a friend. You get along well, after all, and you already know each other. Sounds great, right? As it turns out, that’s exactly what can make it a problem. If things go wrong, it can not only cause problems for the partnership but the friendship as well. Things tend to get more strained when money is involved. You can still do it, but according to My Banktracker, you should carefully consider the risks involved when investing with family or friends and whether they’re worth it.
The person you partner with can have a significant impact on the results of your investment. Ideally, your skills should complement one another, and you should structure your business with your partnership in mind. You need to be able to get along with one another, but keep in mind that friends don’t always make good partners. Carefully consider your options and make sure you choose your partner with your investments and goals foremost in your mind.
Read this next: 3 Ways to Keep Your Investment Property Safe
Steelbridge Realty LLC is a Licensed Real Estate Brokerage that utilizes cutting-edge marketing techniques and data-driven Real Estate solutions in today’s ever-changing environment. Our group of professionals have decades of experience and have navigated through many business cycles. Our diverse background gives us the tools to guide people towards successful decisions.