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Investing Strategies: Partnerships vs going solo

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For some first-time real estate investors, financial restrictions make it impossible to go into a venture alone. In this case, it might be wise to consider partnering up. Partnerships can simply be a group of friends pooling their resources, or can take the form of professional partnership with a shared business goal.

The Pro’s of Partnerships

Pooling Resources:
A good financial partnership can help you get a solid and secure start in your investment. It can also help you acquire a better property that you wouldn’t have been able to afford on your own.

Team Brainstorming:
Two heads can give you more focus in your business plan and can help you identify more opportunities and risks.

Broader Skill Set:
It may be that you’re a pro at renovation work but you lack the financial chops needed to delve into an investment plan. Having someone beside you who complements your expertise will make an overall stronger team.

Task Division:
Don’t underestimate the little tasks that come with real estate investing! More manpower onboard will make your team more effective when it comes to the nitty-gritty’s of your business.

Networking:
Each partner will bring his own contacts and social resources to the table.

Risk Management
A partnership shares accountability and will buffer the effect of losses and mistakes in your investment plan.

Confidence/Motivation:
Having a partner will make investing seem less overwhelming and will help you keep your head up if anything goes wrong.

 

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Want the whole scoop on investing? Download our free e-book here.


The Cons of Partnerships

Potential Conflicts:
Conflicts can easily arise due to different opinions, interests and goals during the course of your relationship.

Trust Issues:
Unless you’re working with a really close friend or family member, suspicions may arise at some point regarding the integrity of your partner. (Even when working with friends, treat your endeavours like a business! Get everything in writing rather than going by verbal agreements!)

Group Think:
Divergent opinions and brainstorming can actually lead you astray from the clear solution to problems you may be facing.

Smaller Profits:
Your profit margins are likely to shrink when you’re splitting the gains.

More Complicated Taxes:
When you work alone, your taxes are relatively straight forward. The more people you have on your team, the more complicated and costly your book keeping becomes. Unless your partner is an accountant of course. In that case, props to you!

 

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