Home » Real Estate

Working with Partners : Using Leverage to Explode your Real Estate Business

Apr 22, 2008
While there are some successful single member real estate businesses, partnering is a common method used by real estate investors to maximize their leverage and their effectiveness. Understanding some basic principles can help you be smart about how and when you work with partners.

There are two fundamental ways to partner and two fundamental meanings to the term. The least binding way to partner in real estate is to split profits from specific deals, deal by deal, according to a comfortable working arrangement. This type of partnership between two people or entities can be put in writing in the form of a joint venture agreement, which should contain a few key clauses.

The first is that the parties have to agree on decisions regarding the actions of the joint venture. The second is that profits generated by the joint venture will be split equally between the venturers. Another is that the parties will be separately responsible for their own operating expenses.

A fourth is that the parties hold each other harmless for damages they incur. And finally, another states that the parties are independent agents and are free to do any other business outside the joint venture. Make it subject to cancellation by mutual consent of the parties and you've got something in writing to formalize the arrangement.

The advantages of this type of agreement are that you can joint venture with as many people as you want without sacrificing your independence or freedom, or incurring liability on account of someone else's actions. The only disadvantage, if you consider it one, might be that a joint venture agreement doesn't actually require either party to do any work.

The second fundamental way to include other people in your business is by equity partnering, which is where you and another person (or people) get into the same business entity and share business decisions. There are many ways to accomplish this, the details of which are beyond the scope of this article, but they all have the same fundamental advantages and disadvantages.

The advantage to this type of arrangement is that it allows you to share responsibility and control within the business, allowing it to grow beyond you and your preferences. The disadvantage is that it requires you to share responsibility and control within the business, requiring it to grow beyond you and your preferences. Not much more can be said except that it is a personal decision that should be given careful consideration.

When considering partners many people think of friends and family first. There is nothing inherently wrong with this, but you should realize that the greater the pre-existing relationship, the more there is at stake should the business relationship not go well, and manage risks accordingly.

Whatever mode of partnering you choose to use there is a particular way to think about the process that will expand your horizons. Often new investors tend to think that the more partners they have the less profit there will be, but this is not the ideal way to think. Instead think of enlarging the pie before you cut it; that way everyone gets a a bigger piece.
About the Author
Omar Johnson is a successful real estate investor and author of the home study course "Secrets To Making Big Money In Real Estate With Little Cash and No Credit" For more info visit http://www.gettingrichinrealestate.com
Rating:
Please Rate:
(Average: Not rated)
Views: 139
Print Email Report Share
Article Categories
    • Artists
    • Gambling
    • Humanities
    • Humor
    • Movies
    • Music
    • Photography
    • Tattoos
    • Television
    • Classic Cars
    • Motorcycles
    • Recreational Vehicles
    • SUVs
    • Trucks
    • Vans
    • Branding
    • Business Opportunities
    • Careers and Jobs
    • Corporate
    • Customer Service
    • Direct Mail
    • Entrepreneurship
    • Ethics
    • Financing
    • Franchising
    • Home-Based Business
    • Human Resources
    • Import and Export
    • Leadership
    • Management
    • Market Research
    • Marketing and Advertising
    • Negotiation
    • Network Marketing
    • Networking
    • Organizational
    • Presentation
    • Project Management
    • Public Relations
    • Small Business
    • Strategic Planning
    • Team Building
    • Telemarketing
    • Training
    • Data Recovery
    • Databases
    • Games
    • Hardware
    • Networks
    • Operating Systems
    • Programming
    • Security
    • Software
    • Spyware and Viruses
    • Ask an Expert
    • College and University
    • Home Schooling
    • K-12
    • Languages
    • Online Education
    • Psychology
    • Accounting
    • Credit
    • Currency Trading
    • Debt Consolidation
    • Insurance
    • Investing
    • Leasing
    • Loans
    • Mortgage
    • Mutual Funds
    • Personal Finance
    • Stock Market
    • Structured Settlements
    • Taxes
    • Wealth Building
    • Coffee
    • Cooking
    • Gourmet
    • Recipes
    • Wine and Spirits
    • Acne
    • Aerobics
    • Alternative Medicine
    • Beauty
    • Cancer
    • Cosmetics
    • Depression
    • Diabetes
    • Diseases and Conditions
    • Fitness Equipment
    • Fitness
    • Hair Loss
    • Heart Disease
    • Medicine
    • Men's Health
    • Muscle Building
    • Nutrition
    • Skin Care
    • Supplements and Vitamins
    • Weight Loss
    • Women's Health
    • Yoga
    • Arts and Crafts
    • Babies
    • Collecting
    • Elderly Care
    • Genealogy
    • Hobbies
    • Parenting
    • Pets
    • Pregnancy
    • Woodworking
    • Feng Shui
    • Gardening
    • Home Appliances
    • Home Security
    • Interior Design
    • Landscaping
    • Affiliate Programs
    • Article Marketing
    • Auctions
    • Audio
    • Banner Advertising
    • Blogging
    • Broadband
    • Domain Names
    • E-Books
    • E-Commerce
    • Email Marketing
    • Ezines and Newsletters
    • Forums
    • Internet Marketing
    • Link Popularity
    • Pay-Per-Click
    • Podcasting
    • RSS
    • Search Engine Marketing
    • Search Engine Optimization
    • Security
    • Social Media
    • Spam
    • Video
    • Viral Marketing
    • Web Design
    • Web Development
    • Web Hosting
    • Copyright
    • Cyber Law
    • Intellectual Property
    • National, State, Local
    • Patents
    • Regulatory Compliance
    • Trademarks
    • Baseball
    • Basketball
    • Boating
    • Cycling
    • Extreme Sports
    • Fishing
    • Football
    • Golf
    • Hockey
    • Hunting
    • Martial Arts
    • Running
    • Scuba Diving
    • Soccer
    • Swimming
    • Tennis
    • Dating
    • Divorce
    • Marriage
    • Weddings
    • Astrology
    • Buddhism
    • Christianity
    • Faith
    • Hinduism
    • Islam
    • Judaism
    • Meditation
    • Metaphysical
    • New Age
    • Cable and Satellite TV
    • Cell Phones
    • Communication
    • Gadgets and Gizmos
    • GPS
    • Satellite Radio
    • Video Conferencing
    • VoIP
    • Addictions
    • Coaching
    • Goal Setting
    • Motivational
    • Stress Management
    • Time Management
    • Clothing
    • Electronics
    • Fashion
    • Gifts
    • Jewelry
    • Causes and Organizations
    • Environment
    • History
    • Holidays
    • Men's Issues
    • Nature
    • Philosophy
    • Politics
    • Women's Issues
    • World Affairs
    • Air Travel
    • Camping
    • Cruises
    • Destinations
    • Outdoors
    • Article Writing
    • Book Reviews
    • Copywriting
    • Fiction
    • Non-Fiction
    • Poetry
    • Quotes
    • Screenplay
    • Tools and Resources