Finding a joint venture real estate partner is one way to break into the real estate investing market. Very often this occurs because a sole investor might not have enough money on their own to invest or they might have the money but don’t know the ins and outs of the market.
Generally each partner will compliment the other’s strengths and weaknesses. But no matter how well you get along and no matter that you might have a personal friendship or family relationship, the first order of business is to hire a real estate attorney to craft your partnership agreement.
There are many intricacies in creating a real estate partnership, such as creating an LLC. While you can do this online for a nominal fee, hiring an attorney to make sure it’s done correctly is a wise investment.
“A lot of investors are very conscious about funds and don’t want to spend any money over and above putting it into the investment property,” Traci Ellis, president and principal attorney at Traci D. Ellis, Esq. LLC, said. “But things can go so sideways without [an] operating agreement [that is] drafted in such a way that protects each person’s interest. It’s money well-spent, because it definitely costs more to clean up the mess afterwards.”
Partnership agreements also explain how much each partner is vested in the company, how profits are divided, tax responsibilities, the amount of capital, property or services provided by each partner, and how to manage the addition or departure of members.
Basically, if you don’t have the funds or desire to hire a real estate attorney to protect your assets, then you shouldn’t be investing in real estate.
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