Private Money Joint Venture Real Estate Investment Offers Best Chance For New Or Cash Poor Investors

Partnering A Real Estate Investment Deal – Why And Why Not

Why Find a Private Money Partner?

Why would you go in with somebody on a deal? One obvious reason, you don't have enough money by yourself, or you don't have a good enough vehicle to see your money grow the way you want it to… but there’s much more than that. All of us have in one sense or another the capacity to do something by ourselves. If you partner, what you’re choosing to do is join forces to make something happen which wouldn't happen by yourself, or wouldn't happen easily by yourself.

So you partner…

√ To share the risk.

√ To pool your resources, strengths, contacts, experience and perspectives with someone else.

√ To capitalize on the effect of synergy, when the whole really is bigger than the sum of the parts.

√ Often two heads together are better than one.

√ To share the work.

√ To capitalize on your strength and those of your partner or partners. Perhaps one partner is more comfortable, or more adept, at taking the active or operating partner role, while the other is better in a more passive position. You can combine your complementary needs and attributes. If two of you both do the same thing, it’s probably not a good partnership fit. You have nothing to offer each other except one-upmanship, competition, or knowing that either one of you could do it yourself.

√ To maximize the outcome while minimizing time spent. This may mean you are able to accomplish more individual projects or deals as a result of partnering. To build future relationships. Perhaps one of the reasons for partnering on a small deal is so that when something larger comes along you've already set up the mechanism to be able to participate. It’s networking for long-term results.

√ To ally yourself in a venture with someone who has had more experience, or has more expertise, so it is an educational experience for you.

Remember, there are no perfect answers. I did know a couple of ladies as a matter of fact who partnered on renovating a home just because they wanted a play toy and they had a lot of money. So they partnered for an adventure. People can partner for many different reasons.

Why Not Do A Joint Venture on Real Estate Investment?

But, is partnering a good idea? You may have heard horror stories. Why not partner with someone? What are the benefits of not partnering?

√ To keep a bigger percentage of the profit.

√ To remain in control of all of the decision making.

√ To avoid the added time and pressure of managing a relationship as well as the project.

Personality conflicts do occur.

To avoid conflict, you may want to avoid getting sucked into other people’s problems, both legal and financial.

To keep it simple. Simple is always good, and all of us know that sometimes it is hard to work with other people.

But Yes!

The main reason you do partner with someone is to make things happen that couldn't happen without the partnership. You've decided to take the risk in order to do something more, or better, or different, so you'll need to structure it to get the rewards you think you deserve.

For the most comprehensive guide to real estate investment using private money, see the Private Money Partner web site. It has over 70 pages of free information about getting and working with private money as well as contacts to investors with money to provide for your venture.

Paul Gilchrist is a real estate investor, and is also publisher of the web site PrivateMoneyPartner.com, which is about joint venture private money real estate investing.