What do real estate investment partnerships allow me to do that I can’t do on my own?
It depends on the type of investor you are and what
quality of property you are seeking.
Let’s first assume that what you can invest on your own or invest
through a partnership would have the same rate of return.
First, it’s important to choose your partners and sponsor
(lead investor) carefully. Alignment of
interests and trust is key to successful investment. Initial questions to ask:
we similarly capitalized?
they have a history of real estate investing?
we have similar goals (long term vs. short term)?
do they present information, and how do they treat me?
Next, consider what you can accomplish with others that
you may not be able to accomplish alone:
in higher quality assets
asset diversity and mitigate risk by spreading your investment over several
investment opportunities through the partnership
from their perspective and experience
Real estate is cyclical, so good partners are critical in
sharing both the potential upside and downside. It is also largely illiquid
(not easily converted to cash), so partnerships can last a while.
With the right investment group, you can leverage your
investment dollars with better diversity and risk-adjusted returns than going