“To partner or not to partner – that is the question.” Whether you’ve done zero deals or 100 deals, if you are a one-man show, you will inevitably come to the point where you will ask yourself this question. Should I partner up?
How you answer this question can be the difference between failure and success. Or at the very least, success and massive success. However, an answer in the affirmative isn’t a guarantee that your business will expand either.
It should be said that syndication deals and any other real estate deal that involves partners will always have their challenges. In this case, let’s cover the three kinds of partners you should avoid in any real estate deal.
1. The Know-It-All
We all know how it goes. They know more than you and there is always a story to one-up you. These partners don’t need your input — they already know what to do and how to deal with the issue at hand.
These partners are dangerous because they are unwilling to be open to other perspectives. Every deal is challenging on its own, but more minds, thoughts, and ideas will likely yield successful avenues to overcoming those challenges.
Know-it-alls are dangerous to deals. It is okay to not know everything about a deal. I constantly learn something from every deal. No one knows it all. If there is someone who is not open to others’ contributions to a deal, then that is not a partner you want. Remember, this will be your partner for the duration of this deal.
2. The Bully
No one likes a bully. In fact, some states have laws against bullying. When one partner uses intimidation, condescension, insults, and threats to force an issue or get their way, that is a disaster waiting to happen.
It goes without saying that the schoolyard bully should not be part of your team of investors. Bullies are insecure about something and typically, their agenda is not in line with the mission of the investment team.
If you find yourself with a bully on the team, they will inevitably jeopardize the deal. They could be demeaning to other partners, the lawyers, the bankers, and everyone who is not them. Standing up is always the best option. Have a zero-tolerance policy for bullying and disrespectful acts when partnering up for a deal.
3. The Control Freak
Syndication deals, big and small, require a free flow of information among the members, the lawyers, and the bankers. Deals move smoothly when there is open communication.
Investors need to know what is happening with their money, time, and efforts to achieve success. Moreover, those investors need to be involved in underwriting, financing, and legal requirements to close the deal.
So you shouldn’t let someone demand to have or hoard all the information thinking they’re in control. They may not share legal documents, not disperse requests from the lawyers to the other partners, and so on.
That type of situation always leads to chaos. Legal documents may be wrong, opinion letters could be missing, and due diligence will inevitably be delayed, which may cause your closing forecasts to be pushed further back.
Remember that partnerships are very much like a marriage: they require communication, understanding, kindness, and an open mind. No deal is worth an abusive relationship. There are always other deals to be found and other partners who will support the team mindset necessary to achieve real estate investing success.