They say you should never mix business and pleasure but how do you find the right investment partner if you have never met any of the potential candidates before? As the price of property in the UK continues to rise investors are now looking to other parties to assist with finance. There are obvious pros and cons to investing with a partner but the main question is; how do you find the right third-party?
Don’t get personal
We all know that the easiest way to find an investment partner would be to speak with friends and family who are perhaps thinking along the same lines as you. In theory there is nothing wrong with this idea but in practice history shows us that it is fraught with danger. The best investment partnerships, indeed the best business partnerships in many forms of life, are impersonal.
The showbiz arena is crowded with partnerships that work well on the TV but very rarely mix in real life. The investment arena is slightly different and we do see the odd sibling partnership but in theory the best investors never mix business and private lives. Keeping things impersonal is the only real way of ensuring that your decisions are not clouded by your friendship. In business you need to use cold hard facts and if something is not working then you need to be able to say so without fear.
Reputation, reputation, reputation
There are millions of potential property investment partners out there who would jump at the chance of working with somebody with a similar mindset to them. It is therefore essential that you check out the reputation of any potential partner (and remember they will also be checking out your reputation) to see their track record. If it looks wrong or it feels wrong then you really do have to go with your gut instinct because you could be putting significant amounts of money on the line. Unless you are totally comfortable with a third party investment partner this could lead to major problems further down the line.
As we have mentioned in some of our recent articles, the growth of the Internet means that very little in the way of bad news can be hidden. So, if a potential investment partner has been active in the investment arena, or perhaps they have other issues, it would be very difficult for them to hide any criticism. The Internet really is your friend!
Setting the guidelines
Fear and greed dictate the short, medium and long-term direction of any investment market therefore when working with other partners you need to ensure you have strict guidelines about your aims and aspirations. It is also essential that all agreements are legal and binding with detailed small print to ensure that each party knows where they stand. If you have these strict guidelines in place then in theory it should be easier to address potential problems and positive issues going forward.
It is only at the “setting the guidelines” stage that you will see whether your potential property partner has the same aspirations as you. There is no point having different parties looking for different returns, although it is essential that they bring different skills and experience to the party, because quite simply you need to be singing from the same hymn sheet.