Partnerships For Property Investors
A Partnership is a great way for investors who are starting out to leverage off each other in order to move forward faster in their investing. Most successful investors have used partnerships as a mean of accelerating their growth, at some stage.
However, Partnerships also come with issues. People don’t think the same. This can be fantastic as it can bring new ideas and collaboration which can result in magnification of results and significant growth, and it can also bring disagreements and ultimately break-ups!
So what can we do when forming a partnership to ensure that the best chance is given to a long-term successful (business) relationship? Lets look at the 8 key factors to a successful partnership.
1. Choose a Partner Wisely
Firstly, choose your partner wisely. Much like marriage, partners need to be compatible and able to communicate successfully. People communicate in different ways and styles, so it is important to partner with someone who you understand and you can communicate with well, even at times of stress, and when things are not going 100% to plan.
2. Have the Same Goals
Be sure that both Partners have the same goals. For a partnership to be successful, both partners need to be pulling in the same direction. It is really important that both people acknowledge the reason behind their investing and what the end goal of the partnership is. If this is set clearly from the start this will help set the foundation for a good relationship.
3. Don’t bring baggage into the Partnership
This will be a business relationship and needs to be treated this way. If you wouldn’t behave this way in your “day job” then don’t think it is acceptable in this position either. Especially when things are not going right (and this will happen at some stage in the partnership) it is important for both parties to be sensible and behave professionally. A business partnership is in many ways similar to a personal relationship – but it’s NOT one.
4. Set a clear Partnership agreement
Set a clear agreement for the partnership and a dissolution agreement for when it ends. At some stage your partnership will end.
Sorry, this is just the way things happen. Very few business partnerships last forever (or even more than a few years) because things change, goals are reached and one or both parties decide that it’s not longer right for them, for various reasons.
Here is where it is VITAL to have already made a dissolution agreement spelling out what happens at this stage. You don’t want to be unclear what to do when it’s time to dissolve the partnership. Spend as much time as necessary creating this document. This must be done with legal representation, not just a form downloaded from the internet.
It might take months to put together but it will be worth it when the time comes. Trust me.
5. Agree on responsibilities
Agree what each partners responsibilities will be, and stick to them. A partnership will work if both parties have clear roles and execute them. This way each person will be able to play to their strengths and each will perform an equal (and fair) amount of work. If workloads are not even, then certainly this can be communicated and sorted.
However, the jobs for each person need to be clearly defined and then each person needs to be responsible for doing their job.
Be accountable for your plans and actions. For a partnership to work, both partners need to stick to their plans and goals. Not everyone has the same time-management skills and focus and it is likely that one partner will be better at achieving goals set than the other.
To be fair to both partners, each person must agree to what they will achieve and then do it otherwise the partnership will fail.
7. Communication and Planning
Get together regularly to re-assess and communicate. The goals posts for the partnership will likely move during it’s course. If you are investing in property then you will likely have multiple deals and each one will bring new challenges and issues.
Regular meetings (outside of the distractions of day-to-day work) are essential to keep moving forwards successfully.
8. Have fun
A partnership is a great way to move forward, and you will each learn a lot about yourselves and each other along the way. Enjoy the journey.
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