Skip to Content

Get a FREE assessment of your rental property. Start here!

Get a FREE assessment of your rental property. Start here!

Three Drawbacks of Having a Real Estate Investing Partner in Baxter

Baxter Real Estate Investor Holding Out a Set of KeysHaving a real estate investing partner can solve a lot of problems and it really has a lot of benefits but there are always two sides of the coin. With partnership comes a few potential drawbacks with it. Investing in Baxter real estate comes with many hurdles, which entrepreneurs try to go over by themselves. But sometimes, the problem one encounters would be easily solved by bringing in a business partner. So, a lot of property owners rush and find one. However, you need to give it some thought before making the decision. Partnerships like these can be quite a handful to manage, and if things between you and your partner get rough, you may be creating problems instead of reducing them.

Among the potential drawbacks of real estate investment partnerships, there are three major disadvantages that every investor needs to know. These disadvantages include: sharing control of the business, a more difficult decision-making process, and a much higher risk of disagreement and miscommunication.

1.     Sharing Control

There are times where the idea of sharing tasks with a partner seems like an answer. It is true that your real estate investing business demands so much from you, but sharing tasks means that you also have to relinquish control over some of your daily operations. Not everyone likes that; it can be a challenge for some investors. In a partnership, there are a lot of things to go over together. You’ll need to agree on how the tasks are distributed and what to do if some tasks aren’t completed to both partners’ satisfaction. If divisions and responsibilities are not clearly spelled out for each partner, important tasks could be left undone or overlooked altogether. Sharing control of an investing business requires a high level of coordination and communication for the partnership to be a success. This means that each partner should have a strong commitment to fulfilling their respective role. Even when things are going well, sharing the responsibilities of a business can be a significant challenge and should not be taken lightly.

2.    More Difficult Decision-Making

As part of the intricacies of navigating the partner-relationship, the added decision-maker can make the decision-making process more difficult. Many investors enjoy the independence that comes with making important operational and financial decisions on their own. But in a partnership, both partners must be involved in every part of the business and they need to come to an agreement on virtually every issue that they come across. If both partners cannot reach an agreement, and neither is willing to compromise, the partnership could become dysfunctional. If that were to happen, the chances of continuing to run a successful real estate investing business together are small. This is the reason why it is important to first determine whether you can rely on your partner before you bring them on. Remember that the phrase “investing partner” has two words— you don’t just receive investment but you have to deal with a partner as well. So, be sure to only bring on a partner that you know you can work with and trust to make important decisions.

3.     Higher Risk of Disagreement and Miscommunication

Good communication has always been a must in a successful real estate investing business, but when a partner is involved, the level of importance goes even higher. Constant end effective communication within a partnership is absolutely essential for it to succeed. With a partner sharing both the tasks and profits from your hard work, there is a higher risk that disagreements and miscommunication will take place. All issues— from how profits will be shared to how much liability each partner will accept— must be ironed out in detail before entering into any kind of agreement. One of the biggest reasons behind a failed partnership is miscommunication that ends up with the partners disagreeing. If an agreement cannot be reached, a disgruntled partner may quit, causing severe setbacks or even total failure.

In Conclusion

There are a number of successful real estate investing partnerships, but there are also many partnerships that did not last. If your partnership experiences any of these three significant drawbacks, it could potentially leave one or both of you feeling disappointed and your business goals no longer within your reach. This is why keeping yourself informed and getting help is important while you’re still mulling over the decision to bring on a partner. This will make you feel a lot better and more confident in whatever decision you arrive at.

So, is bringing on an investing partner the smart choice for you? At Real Property Management Deluxe, we can help you assess your specific situation and offer the information and support you need to answer that question. We can give you valuable industry insight and guidance, helping you keep your investment goals on track no matter what decision you make. If you have any questions or want to know more, please contact us online or call us at 218-454-7962 today.

We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.