# Partnership in Real Estate. Good or Bad?



## Money_Guru (Jul 14, 2014)

Owning real estate is a goal of mine but coming up with the capital on my own seems pretty hard(Still in University). I would personally prefer to find some similar minded people to invest in real estate with and expand from there.

Have any of you experienced investing in real estate with a partner or group?

What are your thoughts on doing something like this?


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## Just a Guy (Mar 27, 2012)

Wouldn't recommend it. Partnerships often break down over money and a division of labour.

Real estate is more about good credit than actual capital.

Check out www.easysafemoney.com for a good beginners book on real estate.


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## Micvanlen (Apr 14, 2016)

There's an entire investment network that's based on the idea of partnering with investors on real estate. It's called REIN, which stands for Real-Estate Investors Network. As you may know, you can only own something like 6 properties, so the REIN system encourages partnerships whereby one partner puts in the capital and the other does all the buying, renting, maintenance, bookkeeping, etc. I know some people with more than 30 properties from this system and each one pulls in about 20K which they split 50/50, so he earns $300K in cashflow a year with this system. goodluck.


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## treva84 (Dec 9, 2014)

Micvanlen said:


> There's an entire investment network that's based on the idea of partnering with investors on real estate. It's called REIN, which stands for Real-Estate Investors Network. As you may know, you can only own something like 6 properties, so the REIN system encourages partnerships whereby one partner puts in the capital and the other does all the buying, renting, maintenance, bookkeeping, etc. I know some people with more than 30 properties from this system and each one pulls in about 20K which they split 50/50, so he earns $300K in cashflow a year with this system. goodluck.


Yes, good luck indeed earning 300k a year with i) someone else doing the work or ii) someone else taking all the financial risk. If it's too good to be true.....

FWIW, if one is serious about real estate investing and they have a significant number of properties I think it would be much easier to create a corporation to manage your properties - the corp is a tax shelter, you limit your personal liability, and if you have partners you can structure it so they are share holders so it's easy to sell your shares if you want to get out (more liquid).

Also, REIN charges a heck of a lot of money for "research reports" when you can get better, more reputable data from CMCH or Stats Canada. Furthermore, anyone who says they can predict the future markets 12-18 months in advance (cough Don Campbell) is pulling your leg.

Lastly, I think the REIN supporters are guilty of fear mongering at times - for example they play on people's fears and misconceptions re the markets - (i.e. "stocks are a gamble, you never know if it's going to go up or down!", or Don Campbell saying you can predict the RE market) to drive people towards their product. I also think they sell the idea of making a person a better real estate investor, rather than actually providing the knowledge and expertise to make someone a better real estate investor.


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## treva84 (Dec 9, 2014)

Money_Guru said:


> Owning real estate is a goal of mine but coming up with the capital on my own seems pretty hard(Still in University). I would personally prefer to find some similar minded people to invest in real estate with and expand from there.
> 
> Have any of you experienced investing in real estate with a partner or group?
> 
> What are your thoughts on doing something like this?


My thoughts are you should wait. You are in University to build your human capital through education and (hopefully) getting the skills for your future career. In essence, your short / medium term investment plan is in yourself. If I were you I would bank money through out University to save for a down payment. Then, once you have the financial means, you can decide whether or not you still want to invest in real estate in a partnership.

Having limited capital puts you in a position where you basically have to accept whatever comes your way, which is not a good position to be in - you'll be faced with compromises - either in your partners or in the property you can invest in. The last thing you would want to do is make a regrettable decision from a position of compromise. 

On the other hand, having capital gives you more freedom to chose. Having capital also puts you in a greater position to walk away if you don't like the partners, the deal, etc. 

Lastly, would you really want to worry about tenants, book keeping, whether or not your cash flow is positive, whether or not your partners are screwing you, etc, while writing papers / mid terms or going to class? I sure wouldn't.


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## Just a Guy (Mar 27, 2012)

I don't know where you got the idea you can only own 6 properties, I bought three in the last three months and I'm well beyond 6 properties. I know some banks say they won't give you more than 5 mortgages, but they lie about that and there are 5 big banks anyway which means 25 mortgages at least. Some of the banks put their limits on the value of mortgages (say two million), not the number of the (I'm still talking getting residential mortgage rates here).

In reality, at worst, they'll only give you 5 at residential mortgage rates before asking you to go to small business lending, after you outgrow small business lending, you go on to commercial lending.

As for REIN, they've made me a lot of money...I've bought plenty of properties which used to be owned by REIN "investors" after they've gone into bankruptcy. I wouldn't touch their kool aid if I were you. 

Look for people who make money from real estate, not from selling systems and seminars, for advice.


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## AnnaDanishek (Apr 21, 2016)

The worst idea to invest in real estate with friends


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## kcowan (Jul 1, 2010)

Real Estate is a very mature segment. Any non-capital contribution has a well-established commercial value. Everything from finders fees for locating property to landscaping and renovations. If the objective is to avoid income, beware your partners.


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## marina628 (Dec 14, 2010)

I speak from experience and have bought 2 rentals with friends in past , in both cases it didn't last the 5 years we were locked into the mortgage .I bought both parties out and ate the cost of refinancing the mortgage but felt it was my only option as one couple were obviously going through issues and I didn't want my rental to be in middle of a messy split.


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## Estell Ault (Jul 4, 2015)

Money_Guru said:


> Owning real estate is a goal of mine but coming up with the capital on my own seems pretty hard(Still in University). I would personally prefer to find some similar minded people to invest in real estate with and expand from there.
> 
> Have any of you experienced investing in real estate with a partner or group?
> 
> What are your thoughts on doing something like this?


Hi Money_Guru. I've never had any experience on this or know of anyone who did but I've read articles online that might help you make a sound decision on this.

You may want to take a look at this: http://blog.memphisinvest.com/thinking-of-a-real-estate-investing-partnership-read-this-first


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## Berubeland (Sep 6, 2009)

So usually, in a partnership, one party has the experience and the other has the money. You have neither experience or money. It sounds like a good plan for you but not the investor. 

Skyline REIT started with two guys in university renting out to their fellow students and managing student houses. You may want to try that.


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## kcowan (Jul 1, 2010)

Also even "perfect" partnerships can go sideways over time. I had one for 15 years and it started sideways when I retired and my partner didn't. It took us a few years to realize that and shut it down. I would have structured it differently in hindsight. But it was fine for 10 years.


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## Durise (May 16, 2016)

Money_Guru said:


> Owning real estate is a goal of mine but coming up with the capital on my own seems pretty hard(Still in University). I would personally prefer to find some similar minded people to invest in real estate with and expand from there.
> 
> Have any of you experienced investing in real estate with a partner or group?
> 
> What are your thoughts on doing something like this?


It will be very easy if you invest in real estate with a partner because real estate is not a little business. If you have a partner, you will handle all the real estate related works very easily. I especilly suggest you to make a partner with unknown expericenced person.


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## spirit (May 9, 2009)

I bought a house before I married....and rented out part of it to help pay the mortgage. After getting married, we kept the house. I will never forget cleaning up after a long term tenant.....taking down the wallpaper and finding dead cockroaches behind it. I stopped cleaning after finding a cooked roach in a coffee maker. 

And that was not the only one like that......granted most of my tenants were good but then there were the others.....and I was lucky I never had any really really bad ones that ran up the overdue rent and trashed the place before they left.

Being a landlord can be a very hard way to make "easy" money.

I had a story to post but lost the url address....will try to find it and post it.


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## spirit (May 9, 2009)

http://www.upi.com/Odd_News/2016/05...pounds-of-trash-left-by-tenant/6641462893961/


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## Just a Guy (Mar 27, 2012)

So a self confessed absentee landlord was shocked that a 14 year tenant piled up 50000lbs of garbage.

Something he may have clued into had he done something other than cash the cheques for 14 years. 

Sort of like the condos who don't collect fees then complain about the special assessment associated with a new roof and other neglected repairs.


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## OnlyMyOpinion (Sep 1, 2013)

Yup. One tip I was given was not to take post-dated cheques but instead come by each month to pick up the rent. That way you can keep a bit of an eye on the condition and circumstances going on at the place. Obviously more difficult if you don't live nearby or own multiple places.


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## Just a Guy (Mar 27, 2012)

If you read your insurance policy, most say you, or your representative, need to at least drive by the property monthly. Failure to do so can void your coverage.


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## Money_Guru (Jul 14, 2014)

Thank you for all your input.

I know real estate isn't easy but I don't mind the challenge. I would rather get into the game sooner rather then later although I know I would have to wait until I found a good deal.

I am able to get help from others with repairs and advice but I cannot come up with the capital myself as soon as I would like. 

My goal would be to raise capital from some friends, manage it and give them a cut of the profit and eventually buy them out.


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## Just a Guy (Mar 27, 2012)

For one thing, there aren't a lot of properties out there which can even cash flow. For another, you're despirate to get into it and have no experience.

Neither of these things suggest you are going to be successful. Are you comfortable explaining to friends and family how you lost them money?

Being successful at finding the money from the bank is part of the job when it comes to real estate investing. If they are unwilling to lend you money because they think you're too much of a risk, that should be a big red flag for any "investor" you try to con out of money.

Real estate investing these days is very difficult to do successfully. It may look okay short term but, if interest rates go up, many will lose more than their shirts.


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