Beware of Income Property Partnerships
- July 18th, 2011
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If you want to acquire a specific income property but you do not have access to the capital needed for the down payment, one option is to form a partnership with someone else. But keep in mind that there are some potential negatives of doing this.
For one thing, you must make sure that the work is properly segregated. Specific responsibilities regarding who does what will need to be documented in the partnership contract, otherwise problems are likely to ensue as one partner might believe that the other is not pulling his weight.
Additionally, the legal document should contain some parameters regarding a potential exit strategy. For example, if a partner wants out, how will the portfolio be split up? These are things that need to be negotiated before a property is bought, not after the fact. The bottom line is just to use common sense, and make sure everything is documented. Good luck!