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Do you need a contract for an investment partnership?

On Behalf of | Sep 30, 2021 | investment Partnerships

You want to go into business by investing in real estate projects. Perhaps you’re looking to buy empty lots or old buildings and then develop them. You know there is a lot of money to be made, but you also need money to start the project, so you begin by looking for investors who share your vision. 

Once you find one, how should you proceed? Do you need to use a contract, or is it enough if the two of you simply agree to work toward the same goal? 

A contract is crucial

It really is important to have an official contract. Remember that you have a lot on the line — not just the money you have invested, but the future of your business as a whole. You don’t want to leave anything up to chance. A contract lets you define things like:

  • What your roles with the development will be
  • How ownership will be divided
  • How you can resolve any disputes that may arise
  • How and when someone can leave the partnership
  • How potential earnings will be divided
  • Exactly who will be involved in the project
  • How to break the partnership if things do not go well
  • What sort of return the investors can expect

You can also use the contract to make sure that you both have the same vision. Are you looking to own the development, running it and leasing out space, or are you just trying to develop it and then flip the property for a profit? You need to have the same focus, and you need to know what legal steps to take to protect yourself and your investment if a dispute does arise.