Attend some Jack Miller seminars and get exposed to a good number of people who have structured many formal and informal partnerships in the past.
While it’s tempting to want to rush in (only “fools rush in”), I’d get comfortable with the upside and downside of working with partners.
I came to the conclusion many years ago that I enjoy working on deals without partners in all but a few exceptions. It just happens to fit my work style and temperment. In fact, when my mentor died in 1996 he willed me his investment company, which I ultimately dismissed the 100+ investors and retained only one (he’s now one of my best friends today).
My bigger point is that it’s hard to know what’s really import to you until you’ve had a chance to think this through and spoken to lots of other (more experienced) people. What you may care most about may not be an issue with your Doctor friend, although as I found out, some investors have some pretty weird ideas about what IS important. That’s why a prefer to run solo except with just a small handful of others.
I’d really feel bad for you if you and your Doctor friend had a hard falling out. The downside to a bad partnership can be financial losses, hard feeling, lost friendships and goodwill, and maybe some really big distractions.
Hi, I have a question about a potential partnership. I know a lot of people say to stay away from them, but I think this could be a win win situation. First a little background information… I’ve been in real estate for about 6 years… have a 10 unit apt building and 2 rental houses… I have also have a side business, so I have the time to get things done during the day… The problem is I am leveraged and am afraid to take big risks right now… The potential partner is a medical doctor who has little time for anything other than his job. He would like to make some side money by flipping a house. We’ve been talking about it for about 3 years. He already has a line of credit lined out so we could close quickly if need be. I believe I have found a potential house we could make a little money on. My question is, what is the best way to structure this partnership so we are both protected? What methods has everyone used to do this sort of deal? I’d love to hear some ideas. I’ve searched the forums but can’t quite find what I’m after. Thanks for any advice!
Have formal P’ship Agreement - Posted by John Merchant
Posted by John Merchant on January 07, 2008 at 08:19:57:
To get everything on the table now, with a formal, lawyer written p’ship agreement is my suggestion for a lasting, less problematic p’ship.
Talk to your lawyer and have him/her do it for you as no smart lawyer is going to try to represent 2 or more partners in any deal, but would represent you alone as the client.
A business practice lawyer is going to know the problem areas you could encounter, and advise you as to how to deal with those, upfront, so would be a valuable move for you beforehand.
Good luck here.
It’s my opinion these can be very profitable and fruitful arrangements if done right, scrupulously and carefully.