Real estate investing, like all businesses, needs capital and expertise. If you have one and lack the other, you can build a small partnership that will offset the limitations. Let us discuss some of the aspects of small partnerships in relation to the real estate business.
Limited Partnership; In a limited partnership, one partner is a general partner while the other is a corporation. The limited partner is not responsible for the business in any way except for financial contribution. The general partner carries all responsibility, from debt repayment to unlawful activity committed under the partnership. While the general partner manages the business and controls the cash flow, he or she is also held responsible if the business goes under. This is especially useful for small real estate investors, as it is way to protect your assets in case of financial loss or loan default.
Family Limited Partnership: Asset Protection One type of small partnership is the family limited partnership. If you and your spouse, or any family member, agree to form a family limited partnership, here is how you do it.
How to Create a Family Limited Partnership; Create a limited partnership to hold your assets, such as, cash, savings, stocks, bonds etc. The general partner will have a percentage share of the partnership, and the limited partner will contribute the rest. The limited partner can buy the shares of the general partner and appoint a new partner. If you are sued, the creditor can own your share of the interest from the limited partnership, but he cannot garnish your wages. Since the creditor cannot dictate the management policies implemented by the general partner, he cannot get the general partner to give him your share of the interest from the partnership. The limited partnership agreement is the best way to protect your assets if you own a small business.
Small Partnerships for Real Estate Investing; A small partnership is a great help when it comes to investing in real estate. If you have the funds needed, but no experience, you can team up with an experienced real estate agent. Both of you can then share the profits. If you have experience, you can team up with people ready to invest their retirement funds, or professionals with a high income.
Syndication; A syndicate is a group of investors who come together to achieve a common goal. Before you approach any investor to be your partner, you should have a detailed business plan ready. This helps the syndicate run smoothly, and if you follow the business plan, you will start reaping the benefits in no time. It may be difficult initially to find a partner, but once you do that and make a profit, other investors will start approaching you, so you can expand your syndicate.
Small Partnerships are great way to generate profits. In a small partnership, people get together to offset each other?s limitations and bring their own expertise and skills into the business. Whereas the ?lone wolf? might have difficulty in running the entire show on his/her own, small partnerships can help each partner to prosper. If you wish to start a syndicate or a small partnership but are not sure who to approach, you can start by hiring a small-business consultant who can give you advice on how to build a profitable small partnership.
Alexander Gordon is a writer for www.smallbusinessconsulting.com – The Small Business Consulting Community. Sign-up for the free success steps newsletter and get our booklet valued at $24.95 for free as a special bonus. The newsletter provides daily strategies on starting and significantly growing a business.
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