Investing in real estate with friends or family can either end up with a jackpot or a flop. Here are some things that you can control to minimize risk when you choose to invest in real estate with friends or family!
Set on the investment strategy and goal to take
There are several real estate investing strategies that you can take. Investor Junkie divided the main strategies for tangible property investment into two: short-term and long-term. That is whether you are going to purchase a property, revamp it, then sell it again for a profit, or renting a purchased property for the long run. Make sure you agree on the real estate investment strategy that you and your friends or family are going to take.
Set specific roles for your friends or family member in the real estate investment agreement
There are several roles to take in real estate investment. Each also has different responsibilities to take. Write who takes which roles, and write in details the role’s job and responsibilities. If necessary, add a projected completion date. Don’t forget to document the projected timeline. Delaying on the projects can cause losses in money and opportunities.
Write the agreements for your real estate investment with the friends or family
A legally binding document on the roles, responsibilities and partnership goals can really save your life. Consult with an attorney if you are trying to take on debt. That way you can ask for a co-borrowing agreement that protects everyone’s interests and rights.
Legally binding agreements can also protect you from a big fight due to disagreements. State the funding percentage for every party involved as well as the distribution of profits and income. Don’t forget to sign the agreements with all the people in the team.
Read also: Real Estate Investment With Friends or Family: The Drawbacks
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