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Why Finding a Real Estate Partner is Important
With so much money on the line in your typical real estate project, how do you go about determining the best real estate partnership structure? The answer is relatively simple: do your homework and don’t rush into anything without being certain of your decision. If that’s not enough to get the ball rolling, however, there are a few more things you should do (and not do) to make sure your real estate partnership structuring will work in your favor.
- The right partner can bring extra resources to the table, including capital or an extensive network.
- A real estate partnership structure allows both parties more flexibility when it comes to financing the project.
- Partners can provide another perspective when analyzing potential deals and investments.
- The combined portfolios from real estate partners can help bring the “wow” factor to meetings with prospective lenders.
- Partnerships revolve around balance, allowing both parties to divide and conquer responsibilities and workload.
Essentially a good partner can bring something to the table you may not have at the moment, whether it’s access to capital or market experience.
The following are some of the tangible and intangible benefits real estate partnerships provide:
- Combined Talent
The ability to merge multiple talents together to form a better, more refined team is one of the major selling points of a real estate partnership. Teaming up with a partner is advantageous for the mere fact it allows investors to play to individual strengths and the ideal partnership is one where both people bring something different to the table.
Knowing their strengths and weaknesses will also help to define each partner’s role in the business, including what is expected from them. While real estate investment requires the ability to wear several different hats, forming a partnership has the capability to enhance the overall performance of the business.
- Shared Responsibilities/Risks
Investing in real estate requires a considerate amount of time and energy to be successful. Like any investment, it also comes with a certain amount of risk. Forming a partnership, however, can easily help alleviate the degree of responsibilities associated with investing in real estate, while also splitting the amount of risk involved. In essence, a partnership will allow investors to share both the risks and rewards associated with real estate investment.
Partnerships can work in an assortment of ways, but the first step is to decide who does what. This allows for transparency and accountability between investors, as each partner understands what is needed from each other to succeed.
- Financing Options
Financing is one of the many challenges, especially when first getting started. The addition of a partner can help to not only alleviate the costs associated with investing but increase the amount of working capital as well as borrowing capacity your business has. Additionally, partners can choose to structure their partnership in a way that achieves the appropriate risk-adjusted return for each investor and their monetary contribution.
In some cases, a partner can assist in finding new sources for financing and working capital. He or she may have a slew of contacts in regard to lenders, whether private or hard money, which is never a bad thing to have by your side.
One intangible benefit a real estate partnership brings is motivation. Having a partner in place who shares the same values and aspirations as you will help to not only drive the business forward but provide support when things awry. A quality partnership will help to build confidence as well as provide a foundation for reassurance.
Real estate partnerships represent a unique opportunity to take your business to the next level by focusing on the tasks that best suit you and your skill set.
A partnership with OnPoint Real Estate is one you can rely on. Visit www.discoveronpoint.com to learn more.