We dive into real estate partnerships, how they should be established, what the various parts of a partnership deal should be, and how much each partner should be making inside of the partnership transaction.
“Principle-based partnership means that everybody needs to come to the table with value.” – Steve Earl
Real estate partnerships are common, but we are often asked how they work. In our experience, there are three parts to a real estate partnership: the money partner, the credit partner, and the managing partner. Of course, you can partner with one or ten people in your deal, but what really matters the most is that everyone has clearly defined contributions and gains.
Without an agreement that outlines the terms of the partnership, you can expect a lot of issues down the road. In this episode, we explain how real estate partnerships work and what are some of the best practices that will ensure everyone in the partnership is happy.
Key Takeaways
- This is what a principle-based partnership entails (02:12)
- The 3 main roles in a partnership and how they work (04:42)
- An operating agreement is an absolute must (06:00)
- Some of the reasons you might consider a partnership (09:16)
- What can a credit partner expect inside a partnership (13:40)
- This is the role of the money partner (19:16)
- A managing partner is an important piece of the puzzle (22:45)
- How to avoid common mistakes in real estate partnerships (24:00)
- The questions to ask yourself before you decide to partner up (28:37)
Top Quotes
“Real estate partnerships open up a world of possibilities.” – Kevin Clayson
“It’s got to be a fair deal for everybody, or ultimately, the partnership will end up failing.” – Steve Earl
“Principle-based partnership means that everybody needs to come to the table with value.” – Steve Earl
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