Do you want to form an Investing Partnership in Florida?
If so, a great way started is to work with other people who have got the experience and know what they’re doing.
But how do you go about finding someone to partner with? At Sunshine State Buyers, we hear this question a lot and as a result, decided it would be a great idea to put a quick article together explaining this issue. You can also check out our website here >>> We Buy Houses Fast Florida!
Who Should You Partner With?
Finding a partner isn’t about who you like the most (although it plays a part). It’s about partnering with someone who you trust is as hardworking and dedicating as you are. You need to ensure you’re working with people who share your knowledge, passion, and commitment.
Many people love the idea of a partnership or club, but the truth of the matter is, they’re just in it for the financial incentive.
You need to ask yourself:
Will the people on your team work with the same drive month after month? Will they be able to commit to their financial obligations?
You need to do screen people carefully and put all of your expectations in writing. Some partnerships or clubs charge a hefty entrance fee in exchange for reduced monthly payments. The aim of this is to thin the herd, so to speak and limit the number of people joining who aren’t serious about the work.
But some people are can still become lazy over time. It’s best to plan ahead and have a contingency in place if you do come across partners who aren’t pulling their weight.
How do you find them?
Chances are you know quite a few people who would be interested in an investing partnership. Still, get the word out that you’re looking for an investing partner. Go to networking events. Perhaps, even host your own meetings and discuss the benefits of partnering on investments. Be specific when you present your expectations and investment plans.
Partnerships are very common. Making them work and maintaining them long term is the challenge. There is a fine line between not enough investors and too many. Too few will mean you don’t have the funds necessary for substantials investments. Wait! Doesn’t this mean that partnering with a lot of people would better?
Not always. When large groups of people come together, there’s no guarantee everyone will share the same goals, dedication, or work ethic. Too many people will cause disagreements, frustration, and in general, be very tough to manage.
Define what you want to invest in.
Create specific goals and outline what each member needs to do. Decide what types of property you want to invest in such as land, commercial properties, multi-family, or single-family homes. Don’t forget there are niche markets that could be worthwhile taking a look at such as industrial properties, mobile homes, and so on.
It’s best to outline what you will and will not invest in from the start, so everyone knows where they stand.
Set up and structure payouts.
Profits should be divided proportionately to how much each partner put forward. Will you have a minimum monthly commitment or a limit? You also need to factor in administrative costs, which can quickly add up over time (paperwork, filing fees, repairs, etc.).
What is covered, vs. what is not covered needs to be clearly defined. The structure of the partnership needs to be discussed in detail.
Cover all possible scenarios: new people joining, people leaving. Is attendance at meetings mandatory or not? Will there be a penalty for missed monthly payments? How will you decide what to invest in? Your investment standards should be black and white and always adhered to.
This is business.
As such, it will need to be treated that way. Create an operating agreement, pay your taxes, consult an accountant, and a lawyer. Getting everything organized upfront will help you tremendously in the long run. Do you want to form a general partnership, an LLC, or a limited partnership? If you aren’t sure, a professional should be able to help figure out what will work best for your team.
But have fun.
This venture shouldn’t be all work and no play. It should be exciting and worthwhile. You should work with fun, likeminded people who bring inspiration and a positive attitude to the table, boosting the morale of everyone in the club. You should strive to enjoy working towards a common goal and building an investing partnership together.