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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:
 

·      Are we similarly capitalized?

·      Do they have a history of real estate investing?

·      Do we have similar goals (long term vs. short term)?

·      How 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:
 

 ·      Invest in higher quality assets

·      Increase asset diversity and mitigate risk by spreading your investment over several assets

·      Additional investment opportunities through the partnership

·      Learn 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 it alone.