74% of properties available for rent are owned by individual real estate investors versus corporations.
Buying a house in a bustling housing market is more arduous, making the rental market even more important.
You want to be a real estate investor, yet can’t quite pull it off alone. So, the idea of a real estate partnership might sound appealing. You pool your resources to get into the real estate investor market.
Is this a good idea to invest with others? Read on to learn more.
Types of Investing
You might be surprised that there are some real advantages to deciding on investing with friends. First, everyone in the partnership must clarify the type of investor they plan to be.
As you consider buying into an investment property, you want to know the level of involvement your partners plan to take.
An active investor intends to be very hands-on. They will be actively involved in the purchase and what happens with the property after it’s bought. An active investor is likely to want to be involved in the day-to-day real estate investment management.
A passive investor is one who takes a more hands-off approach. This type of investor will likely provide capital towards the investment but not want an active role otherwise.
Being one or the other type of investor isn’t good or bad. Just different. For a real estate partnership the work well, all investors need to understand and agree to the level of involvement of all parties.
Advantages of Investing With Others
As you ponder how to become an investor, investing with others has some real advantages. Let’s consider those advantages.
Easier to Raise Funds
Raising enough funds can be one of the biggest obstacles in real estate investing. The reality is that when you invest with multiple investors, they can all bring capital to the table.
On the flip side, you might be an investor with the capital and want a real estate investment partner to handle to workload. So, one brings capital, and the other brings their ability to work on the property.
The criteria for approval might be more easily met with multiple investors. You are likely to have more capital and resources to back a loan.
Each Investor Can Use Their Strengths
Even if each investor doesn’t bring equal resources to the investment, they can get other strengths. Perhaps they can handle the marketing and promotion. Maybe they have renovation skills that would help keep the property up to date.
Access to More Resources
It can also be helpful to take advantage of the resources of your fellow investors. If they have something you don’t, there’s an advantage to the partnership.
Invest in Real Estate and Protect Your Interests
No matter what each investor brings to the table, having a clear expectation about the roles of each investor is critical. Expectations need to be spelled out and in a contract between you.
You can contact a partition lawyer who can help you spell out the contract agreement between partners.
Consider a Real Estate Partnership
A real estate partnership is one way to get into real estate investing if you can’t seem to do it alone. Protecting your interests and having clear guidelines about expectations is the key to success.
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