Should I partner with this guy?

Question

A fellow worker and I want to start our own real estate investment company, but I'd be the one putting up just about all the capital, because he has none of his own...so he says.

Should I get a partner that cant contribute anything financially? It would seem that its only fair that I take most the profits if I agree to go through with it. What do you guys think?

Answer 1

I don't recommend partnerships.  Even if your partner contributes an equal amount of capital, there's no guarantee that they'll pull their own weight in terms of working for the business.

Answer 2

I make a rule not to go into partnership... marriage is enough to handle without having similar issues at work.

Answer 3

Without even getting into the aspects of investing in real estate in this market I have to ask ...

What is he bringing into the partnership?  If not capital then what?  Expertise?  Other intangeble assets that you need to suceed?

You have capital at risk.  What is he putting at risk?  If he is putting nothing at risk you probably don't need him.  If he is bringing expertise in real estate to the transaction then pay him on a transactional basis without a stake in the profits.  

Just my 2 cents.

Answer 4

Hi Congrates

    He s the one sharing nothing ok can be a partner has some knowledge in your business but still u said he has no experiance and ur unhappy with the job but invested ..

he wont care for your money since not invested .. so better not to be a partner

Answer 5

What benefits do you get from him being your partner?  It doesn't seem like he will lose much if things go wrong.  I'd tell him to take out a personal lone to pay his end of the share or tell him he could work for you.  

Answer 6

In what you've put here, I can make some comments on what I can see as potential problems and their solutions.

Firstly, for those who have limited self-employment experience, the important part is understanding that the motivations are different. I'm not talking dreamy stuff here, I mean that thing that gets you to not hit the snooze button in the morning and get your butt out of bed.

To do this, you will have to work out a SYSTEM with your partner. In other words, show him constantly how if he does X he get's Y and as he continues to do X (a self-contained task) he continues to get Y.

In other words, get him to show you how X gets you money. In this case it could be purchasing a house at a discounted price. Have him show you how it put $Z1 in your pocket, $Z2 in his pocket. Keep the constraints really tight, as there will be a temptation on your part and his part to try to monkey with the system of the business.

In other words, you will have to start a boring business. If its not boring, it will go belly up in a year. Boring means stable. However, the upside is that if you can work out the system together, so that your partner knows to do A,B,C everyday, 8 hours a day, that he'll get a fat paycheck every 2 weeks.

Answer 7

I can guide you as both a RE broker and biz consultant.

YOU volunteered what he is not doing as a partner, but what IS HE

bringing to your party?

Answer 8

Don't confuse a partner with an employee.  You can certainly hire him as a vice president or COO, but partner implies that he will be part owner.  I don't see why you would offer that up for free.

ONE way you could do it is to structure his buy-in through work.  You would draw a salary or profit check, but he would not until his share of the company has been paid off.