What is most important when selecting a business or strategic partner in real estate?
Partnering up in real estate is essential, if not at least incredibly powerful. There are many forms of real estate partnerships today. It can be a mentor and new investor, investing in a REIT or real estate crowdfunding offering, co-founders launching a business together, borrowing or loaning capital, or collaborating with another related business to refer clients.
Done well a partnership can make all the difference in success, and speed in reaching goals. Executed poorly it can be completely disastrous. So what do you need to know before getting involved with a partnership?
Check these four boxes:
Shared Values
Ignore the money and ego promises for a moment and really investigate whether you share the same values. If you don’t, none of the potential upsides will matter much. You will end up working against each other. In the medium to long run that could become far more costly and damaging to your reputation than any potential benefit.
Shared Risk
Billionaire real estate investor Sam Zell defines a true partner as someone who equally shares risk with you. So what are you risking? What are your potential partners risking? This doesn’t have to be the same thing on either side, but both should have a vested interest in making this partnership work.
Clean & Clear Exit Strategy
People change, companies change, plans change, and goals change. How are you going to part when it comes time to dissolve the partnership? Do not make the mistake of leaving this decision and strategy for later. That is guaranteed not to be fun or profitable. Create a clear path for going your own ways. Put it in writing.
Customer Service
Your success and reputation in the real estate world depend on service. You may be great at service, but is your potential partner? How do they treat people? How great is their team at customer service? Is this even a priority for them? Don’t just take their word for it. Check reviews, ask others, and test them out as a mystery shopper.
Have any other criteria you use when selecting partners? Have you run into challenges with partners in the past which could have been overcome by implementing these checks? Let us know…
Authored by Best Transaction Funding BestTransactionFunding.com is the leading source of transactional funding for real estate wholesalers, where 100% financing, and saying “Yes” is what we love doing all day long.
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