The Power of Partnership
By Christopher Levarek
Today, we discuss partnerships with regards to business and of course real estate. The idea of partnering with another person or company tends to trip up a lot of investors as the focus is on what is lost and not what is gained. We hope to offer a different viewpoint on the idea of partnerships in the following.
Why Partner
Partnering with another individual or company is powerful. In a partnership, both parties seek to expand upon the strengths of the other party to tackle a enterprise or obstacle that would be difficult or impossible to best alone. In doing so, both parties attain heights of success which were hard to imagine from the single entity point of view. This not only brings the rewards of the venture but also creates a mental shift in the capabilities of the entrepreneurs or real estate investors involved. It opens up possibilities and ideas for much larger ventures going forth.
With regards to real estate investing, the focus should be on what is gained for both parties in the venture and not so much what is given up. If by partnering for example, each party is able to acquire 50% more assets each in a deal versus acquiring 0%, the choice to partner is clear. In other words, if by not partnering zero action is taken to further ones goals, then zero progress is being made towards those goals. This is why choosing to focus on the gains of the real estate partnership versus the loss or assets given up is the more efficient mindset to further progress in ones goals.
Who to Partner With
When looking for a partnership, seek a company or person that can bring something to complement your strengths/weaknesses. The ideal partner would be one who is weak in areas you are strong and strong in areas you might have weaknesses. It will not be a powerful partnership if both parties are strong in one given area but are unable to deliver in a much needed area needed in the venture. This often gets missed as many partnerships are created on the ease of existing relationships instead of according to the purpose/goal of the partnership in the first place.
We advise taking a moment and examining the areas of weakness/strength for both parties. Being open and honest will only benefit the arrangement and ensure it is one that is needed. Great partnerships are a thing of beauty, just look at examples like Steve Jobs/Steve Wozniak(Apple) or Larry Page/Sergey Brin(Google) demonstrating the power of choosing the right partner.
Define the Partnership
Choose to define the partnership first. It is of the utmost importance to have the role of each partner clearly stated in both written and verbal format before any action as partners is taken. By spelling out the specifics of the arrangement, there is little room for conjecture and guesswork in the future and accountability becomes a strength instead of a weakness.
We recommend consulting an attorney or involving one in the partnership formation so as to have a third party view on items that might be missed by either side. Whether a Joint Venture agreement or entity is created such as a LLC, the benefits of defining the details before they are needed will only strengthen the partnership. In real estate, focus on an attorney specialized in real estate entity creation/management as they will be able to highlight issues to address with years of experience in managing partnerships both successful and not.
In Final
Partnerships can allow one to tap into opportunities previously unattainable. This is the power behind such ventures. Shifting the “I can’t” mindset to a “How Can I?” mindset through the understanding that no goal or venture is out of reach with a well defined and structured partnership. Invest Smart!