Partners can really make or break your business. Finding good ones is easier said than done. How do you find or attract the right partners? How do you know when the right person comes along? Will they want to partner with you and what should you offer them when they do want to partner with you? These are questions I get asked all the time. Here are some ideas about partnering in real estate but this article is not about the legal structuring side of partnerships, it’s about the people side.
A good partnership starts with equal but opposite skills, not necessarily a friendship. It’s good to be friends with a partner but contrary to popular belief that is not the most important part and not where you should start. A good partner will bring strength to your weaknesses and you the same for them. You are going to be splitting a lot of hard earned cash with this person so you want to know what it is that they bring to the table. What are they capable of that you are not and what are they capable of that you couldn’t easily hire an employee to do? The first step in answering the questions is to do a long self-analysis. Start with what you are good at. Ok you don’t need a partner to do any of those things. Now what are you really bad at? Now you know what a partner should bring as far as skills are concerned. They need to be good at what you are bad at or have what you don’t.
“What do you have and what do you want?” This is what I basically ask anyone who approaches me with a potential partnership. I want to know what it is this person needs from me and what it is they are offering in return. It amazes me how rarely people can answer those two simple questions. Most often they say things like “we like you and want to work with you” or something along those lines. As I am flattered by this I will usually decline to accept the offer. This type of answer lets me know that they have not thought out a good enough business plan explaining what they want from me and what they have to offer before approaching me. Have an answer for what it is that you need and what you are willing to offer for it before you approach a partner. This will go a long way in attracting real talent to your team. I never (and you shouldn’t either) join a partnership where you don’t bring significant value to the deal. When it comes time to share in the profits people will start to look around the table and ask “why is this partner here?” If your benefit is not very clear then people get greedy at the last second and that is when partnerships get in trouble. If your value is indispensable, this is much less likely to occur.
Now the value aspect of a partnership swings both ways. What do YOU bring to the table and what do YOU want in exchange. You should also have this worked out before approaching a partner. You need to be as valuable as you possibly can be. What do you have they need? Maybe you found the deal. Maybe you have the money or credit. Maybe you have some skill that cannot be replaced easily or perhaps you have the RE education they don’t. Whatever the case, you need to highlight those values when trying to attract someone to your deal. Again, if you don’t have any value in the situation then you need to decline the partnership or find partners that you do bring value to.
Sometimes a mastermind group is all you need. I see people that form large groups because they feel that there is safety in numbers. I met a group a while back that fit this description. They were 6 people that were going to come together to do a deal. I was asked to consult with this team. I asked what each person’s job was in this partnership. They said that 2 of them would call agents, 2 of them would look for deals, and the other 2 would look for money. My response to them was that each person should be doing all 3 items alone. It does not take 6 people to do each of these tasks. No one person brought any real value to the team other than covering the menial tasks that I mentioned. I suggested that they stay together as a mastermind group so that they could continue to motivate, hold accountable, and share information with each other but that in my opinion, this was a group that would fail when it came time to share in the profits. Remember that each team member will take a cut of your money. With that in mind…take a look at each partner and ask yourself if they belong on the team.
Good partnerships are the backbone of our business. Real estate is a team sport. Finding and keeping valuable team members is extremely important. The synergy between good partners is priceless but be careful and slow in the selection process. Once a partnership is in place you will not only be responsible for yourself but your team members as well.