If you’ve thought about buying a rental investment property, a real estate partnership may be a good starting point, but there are both benefits and drawbacks to real estate investment partnerships.
Inviting a partner into your real estate investing activities can potentially add a lot of value and support. But, sharing a business with a partner also means sharing control of the properties.
Therefore, one of the keys to a successful real estate investment partnership is finding the right partner to work with. Taking this into account, let’s review the benefits and drawbacks of real estate partnership.
The Benefits
1- Larger Capital: Residential real estate investing partnerships can be very successful, leading to significant financial growth for both partners. This means that partners can have the opportunity to earn a higher return on investment for the capital they are putting into the venture.
2- Add a new level of expertise: Each partner brings something different to your business activities. So, it can be helpful to create a well-rounded team that balances each other out in terms of expertise and experience.
3- Create a second opinion: A partner can also provide a second perspective when making key business decisions. In addition a diverse group of partners can also represent multiple perspectives and backgrounds.
4- Tax Benefit: Another benefit to a real estate investment partnership is tax flexibility. For example, partners can choose how they want to receive their return, one partner may want a majority of the tax benefits, while another partner might prefer receiving the free cash flow.
The Drawbacks
1- Level of Control: Some investors want to maintain control over all of their business and financial decisions, and may find it difficult to relinquish at least partial control to another person. The members must clearly define each partner’s duties and responsibilities in their partnership agreement.
2- Potential for Conflict: Another drawback of a real estate partnership investment is if a project is unsuccessful or a partner wants to exit early, and another partner needs to contribute additional funds.
Real estate partners can provide value to a deal but they are not always necessary. A business partnership is bound to see disagreements. It would be strange if you both always agreed on how to run your business. Disagreements help you grow as entrepreneurs and determine what’s truly important.
Investing in rental properties can be a great way to generate income, but often comes with unexpected and challenging issues.
That’s why it is important to have the right team of professionals on your side that are experienced in handling all details, so you don’t have to! We’re here for whatever support and guidance you need – let us help achieve success without sacrificing peace of mind! Contact us at zoodpm.