Real Estate Partners A Good Idea

Real Estate Partners A Good Idea

Real Estate Partners - a​ Good Idea?
We were looking for​ real estate partners because we were new to​ the​ Tucson area .​
We found that two identical houses here can be $50,000 apart in​ price if​ they are three blocks apart .​
Also, the​ styles are different from anything we had in​ Michigan, so it​ would be good to​ have some help figuring value and​ what buyers want.
At the​ Arizona Real Estate Investors Association meeting I​ announced that we had money to​ invest in​ fixer upper real estate, and​ we were looking for​ partners .​
The host wrote our names and​ phone number down on the​ overhead projector along with the​ others .​
About three days later we got a​ call.
Sam and​ Nikki were nice people, and​ we got along well when we met .​
Their offer had been accepted on a​ house .​
Looking at​ the​ comparison sales they had found, it​ seemed like a​ good buy .​
They had done rough estimates of​ the​ rehab and​ remodeling costs, and​ it​ looked like we could make some money .​
There would be a​ third couple involved, so the​ expected $75,000 profit would be split three ways .​
Agreeing in​ principle to​ the​ deal, we arranged to​ meet the​ other partners at​ the​ house after closing.
Too Many Real Estate Partners
Six people with six opinions can be a​ problem .​
I​ never understood why the​ beautiful wood floors had to​ be torn up and​ replaced with carpet .​
For that matter, I​ never understood why they couldn't at​ least be carpeted over without the​ expense of​ tearing them out .​
Both my wife and​ I​ thought it​ was a​ crime to​ stucco and​ paint the​ beautiful brick exterior of​ the​ house, but were assured that buyers here would like that better .​
Raising the​ roof of​ one room seemed expensive and​ unpredictable, but the​ ceiling was a​ bit low.
There were plans and​ new plans, and​ weeks of​ stressful anticipation evolved into stressful worrying .​
We discovered that the​ houses in​ the​ area were selling for​ less than we initially thought, that the​ rehab cost would be more than we thought, and​ that all the​ other partners expected to​ do much of​ the​ labor, rather than hire it​ out .​
The profit projection dropped from $25,000 each to​ $10,000, and​ we felt there might actually be a​ loss .​
We dropped out of​ the​ deal .​
Fortunately the​ other partners had procrastinated for​ several weeks on the​ signing of​ the​ joint venture agreement .​
They also were decent people, and​ had noticed our anxiety .​
Nikki called to​ suggest we let them find a​ way to​ finance it​ without us, about two minutes before I​ was going to​ call to​ say we were out .​
It ended amicably .​

We learned a​ lot .​
I've had partners before, but I​ let the​ partner take my money and​ do his thing to​ make us a​ profit .​
This group decision-making, especially with so large a​ group, just doesn't work, at​ least not for​ my wife and​ I .​
One day, standing in​ a​ Home Depot hopelessly looking at​ carpeting samples, I​ also realized that non-financial contributions need to​ be clearly defined according to​ each persons knowledge and​ skills .​
We truly hope they make a​ lot of​ money on the​ project .​
If they do, we may even be willing to​ be partners with one or​ the​ other of​ the​ couples .​
If so, though, we'll just look at​ the​ plan, put up the​ money, and​ let them do their thing .​
That's my idea of​ real estate partners.

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