7 Secrets to Successful Real Estate Partnerships
What are Real Estate Partnerships?
These are partnerships between people who find suitable properties with a promising economic future and buying them with reliable like-minded partners. These partners bring money to the table and share the risk on the venture. They are well-versed in the rules, regulations, and laws besides the reputations of the builders.
The Secrets to Success
Besides experience and a good head for business, the partners should have;
- A common goal – They should concur that appreciation occurs over a period thus they should be willing to incubate these nest eggs. Meanwhile, renting the property and earning a monthly income that pays the mortgage while inducing equity growth. The partners reap tax benefits from running this real estate investment business.
- Investment skills such as fundraising, finding opportunities that others may have missed and specialise in finding deals in the niche market. Besides the knowledge of the business, they should know the investment is more than buying. It’s about heeding the smart advice.
- Keep up with the trends – This industry is complex and keeping up with the trends helps forecast the direction the market will take. The trends are based on these fundamentals – the population, rental rates, interest rates and upcoming projects.
As the population increases, the demand for housing increases. This means lower vacancy rates and higher rents. Studying the rental rates help predict the Return on Investment. As interest rates increase the cost of financing a new home increase making them difficult to sell. Leading to people renting rather than buy. Tracking the location of the upcoming projects helps study their growth potential.
- Awareness of Investment Obstacles such as fear of failure and not knowing enough. Overcome them with focus. Avoid negative people – cynics criticise while winners analyse. Avoid arrogance and laziness it helps remain alerted to the tips, trends and opportunities and avail to them. Get into the habit of growing assets.
- Be aware of the pros and cons – Real estate is a minimal risk investment that reaps great profits over time. It requires capital as little as $15000-40000. The leverage capital allows for small investment while the rest can be borrowed against the property in the ratio of 9:1 or 8:1.
The original investment grows due to the appreciation of the property. Offering a net equity that is greater even after deduction of the original price, commissions, etc. It is also a hedge against inflation while you enjoy tax breaks making it a cumulatively higher ROI due to rising demand for land. The disadvantages are a tedious selling process that inhibits liquidity and long holding periods that extend investment recovery.
- Goal Setting and Wealth Creation skills– Believe in the philosophy that – Doing our jobs makes us money while doing business creates money. Sell a property buy two for your family, offering them financial independence. Use the hybrid investment strategy where you buy and hold while offering a rent to own/lease option. This creates a regular cash flow.
For example, find 10 tenant buyers as partners who can afford to pay the down payment and monthly payments and option credits but there is no place for them. Then you buy the property and help others while earning the rents.
- Reasons for failure – are information overload and lack of a definite plan. Having a system in place, understand the market and its workings, a plan, right resources, and associates help Real Estate Partnerships a great deal.
About the author:
Elena Tahora has been investing in real estate for more than 10 years and writing about real estate investing for seven years. She’s working as digital marketing manager at Malta Real Estate.