Are you ready to start a brand new business set up with a partner? If so, then you’ll need a legal document to help you establish a solid foundation for your fledgling company. One of those documents is the real estate partnership agreement. This not only provides a way for you to steer clear of any legal trouble down the line, but it also encourages clear communication between you and your partner. Read on to learn more about this important document.
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Real Estate Partnership Agreement Template
What Is a Real Estate Partnership Agreement?
For those who desire a clearer definition, a real estate partnership agreement is a legal document that binds two parties together under the purpose of operating a real estate business together. Partnering in real estate is not always easy or even immediately advantageous, so having a real estate partnership agreement form drawn up is always going to be a major decision. There are even different variants, like the investment partnership agreement and the real estate investor partnership agreement, just to name a few. Also, as seen from the list above, there are multiple free real estate partnership agreement templates to choose from.
Tips on Drafting a Real Estate Partnership Agreement
So now that you know what the agreement is all about, do you think you’re ready to get that real estate partnership firm or real estate company off the ground? Even if you and your real estate business partner have worked everything out, nothing is still official or final until you have your own real estate partnership agreement sample to work with. If you aren’t keen on downloading templates, then maybe the following tips will be of better use to you:
Tip 1: Clear Up Your Expectations Beforehand
Once you have everything in writing, there’s little chance of you going back on the agreement by that point. Before you and your partner agree to have it in writing in your partnership contract, always specify what you expect with each other. This will avoid any unnecessary miscommunication incidents going forward.
Tip 2: Make Each Partner Invests
It would not be much of a partnership if only one party is funding the entire thing. Real estate ventures are not cheap and are not for the faint of heart. Before you have everything finalized with your agreement, be sure that everyone involved has made some kind of financial transaction or contribution.
Tip 3: Structure Deals to Align Incentives
Just like with the initial capital investment, it would not do for some partners to achieve more than the others. Unless there is some kind of pre-conceived deal that everybody is okay with, you need to structure your deals in such a way that the incentives for everybody are properly aligned.
Tip 4: Avoid Any Large Upfront Fees
You’ll want to structure the payments based on either performance or on your cash flow. Upfront fees that are particularly large would not make smart investments. Not to mention how high the investment risk can be.
FAQ’s
What do you mean by a real estate joint venture?
To define it in the simplest way possible, a real estate joint venture is the term referring to a deal between more than one party to collaborate on a real estate project.
How are profits split in a joint venture?
As long as all parties are in agreement, then the business profits may be split in however manner you want to split it. Some split it equally amongst themselves while some may receive an agreed-upon but unequal amount for whatever reason.
What are some advantages of business partnerships?
First of all, the individuals or companies involved are given the chance to gain new experiences and expertise by virtue of their new roles in relation to each other. Another is that both parties can enjoy entering brand new markets, as well as receive access to greater technology. Lastly, there is the benefit of pooled resources, which helps with group activities or shared endeavors.
Nothing should be left to chance in any kind of business partnership, let alone one involving real estate. Surviving that kind of endeavor with as much benefit as possible can sometimes be possible only with a real estate partnership agreement. As you know by now, these are solid documents that you can either get in the form of a real estate partnership agreement template or from scratch. Regardless of your choice, know that your future partnerships will benefit greatly from your efforts today, so act now!
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