There are times in business when it feels like it makes sense to pool your knowledge, capital and expertise with another person. It gives you options that you wouldn’t otherwise have to work outside your comfort zone and to be a part of projects that excite you.
As with any relationship, it’s important you know just what you’re getting into. It makes sense to iron out how you want the partnership to work before signing any agreements. If it’s your first time forming a real estate development partnership, here are a few considerations to have in mind.
Find a partner who is a good fit for you
Sharing business decisions with another person can be difficult. It’s important to be sure that the partnership is the right thing for you before you sign up. Look for qualities in a partner that you share and feel you can trust.
Choose the right type of business entity
Generally, people choose to operate under either a Limited Liability Company (LLC), Limited Liability Partnership (LLP) or a Real Estate Limited Partnership (RELP). Which type of entity is right for you will depend on a number of things including how you wish to be structured and the nature of your business.
Have a partnership agreement in place
This document is used to secure, in writing, the role and responsibilities of each partner. It should explain how finances will be dealt with, the goal of the business partnership and the commitment of each party to reaching that goal and how disputes will be handled. This is an important document to have in place as it can be used in legal proceedings should one party not meet their expectations under the agreement,
Forming a real estate development partnership can be incredibly beneficial for taking your business to the next level. Make sure you’re protected personally by having all the necessary documentation in place.