Real Estate Agency "TAO"
Pravolybedskaya Street 27 - 76, City of Ryazan
Ryazan Region, Russian Federation
tel: +7 (4912) 25-70-31
Tel/fax: +7 (4912) 25-70-29
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06.02.2011

Is A Real Estate Partnership A Good Way To Invest?

Real estate partnerships have been around since the cave man's days. This is because people have learned to pool their resources in order to reduce their risk and increase their leverage. Pooling ...






Partnership


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Is A Real Estate Partnership A Good Way To Invest?

Real estate partnerships have been around since the cave man's days. This is because people have learned to pool their resources in order to reduce their risk and increase their leverage. Pooling resources enables them to have a larger down payment, stronger financial statements, or greater experience.
The primary question, "Is a real estate partnership a good way for you to invest?" cannot be easily answered. First, you need to consider who your partners are. Are they strong financially? Can you trust them? Just because they are family members, or your best friend from high school, does not immediately qualify them as trustworthy. You also need to consider whether the investment makes sense.

Check out the key issues. Will you make a return on your investment? How long will it take? Does it sound too good to be true? Remember the old business rule "Caveat Emptor," or "let the buyer beware." Are you comfortable with the level of risk? How long are you going to be tied up with the partner/s? What is your exit strategy? What are the tax ramifications? Are you going to be a majority or minority partner?

In today's real estate investing environment there are many kinds of partnerships. You can invest in a real estate investment trust (REIT), a tenant in common (TIC) project, with partners in business, in a separate limited liability partnership (LLP) or as a limited liability corporation (LLC). Partnerships seem to work best when all sides have some experience, similar investment goals, are not dependant on the income to live, and have taken time to plan out a good partnership structure.

There needs to be a consensus within the partnership on how key decisions are made, and if there is a need to for a managing partner or partners. If ownership in the partnership is equally allocated, then it is critical to have a method to break decision deadlocks such as an outside party that consults, a mediator, or a family member. The best way to reach a consistent approach to your investments is by drafting a written real estate partnership agreement with the help of an attorney. (Note: This attorney will then become the partnership's attorney and not your own personal attorney. If you anticipate conflicts of interest, you may want your own attorney to review the partnership document.)

Trust between partners is built with regular auditable reporting in addition to regularly scheduled meetings and/or communications. You may find that you want to be a silent investor rather than an active investor. If this is the case, you still need to receive regular reports of progress.

Finally, you need to realize that real estate investing is a risky business. You need to anticipate the timing of your investments. You may invest ahead of the curve, or your timing might be off and the property does not appreciate or generate cash flow in the way you expected. Not all real estate investments (either partnerships or individually) make money, and sometimes the economy does not cooperate.



Popular OFFER SALE: 

7 600 000 USD
Manufacturing complex
On request
Hotel


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Partner column

TAO company willing to offer favorable conditions for cooperation partner.

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Partners of our firm can receive significant discounts or access to unique offers commercial real estate in Russia or abroad, we are always happy to secure business collaboration.

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Hotel

Country:
Russia
Price:
ask your manager
Real estate type:
commercial
Area:
5000 sq. m.
Description:
The two-storey building of the hotel

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