By Mike Baird
Everyone knows you can’t build a business by yourself, and house flipping is no different. To a certain extent, you can be a one-man- (or woman-) band, but you’ll still need a real estate team and a rehab team. Eventually, as you grow your business, you’re going to find yourself feeling kind of spread out. You’ll need assistants to bid on properties for you, and you may even find yourself looking for business partners to help grow the business faster and more effectively.
Or you could start your business with partners so that you divide the work and share the profits from the very beginning. If you don’t have the freedom to quit your day job before you’ve made your first few deals, that approach can be really attractive. Of course, you’ll have to figure out who to partner with, and you may be tempted to start your business with one or more friends who have similar financial and business goals. Before you do that, consider a few pros and cons of house flipping with friends.
Pro — Get More Done in Less Time
If you partner with friends, you can “divide and conquer”. You can sit down and hash out your schedules. That’ll let you divide up the work finding leads, calling motivated sellers and closing on flips. You can also divide up who will oversee your contractors and project managers, and you can hire a real estate agent together and/or figure out who’s going to be around during open houses.
Having partners is especially important for the first few months, while your business gets off the ground. You can all go to your day jobs, spend time with your families and have the time to invest in your growing house-flipping business.
Con — Mixing Business With Friends Can Be Problematic
On the other hand, you really need to be careful about which friends you decide to partner with. There’s a saying I’ve seen on motivational posters and memes that I like a lot, “Surround yourself with people you have a common future with, not a common past.”
In other words, don’t just partner with your friends because you’ve always gotten along for years. Choose people who are similarly motivated and who you know will dedicate themselves to getting your flipping business off the ground. If you aren’t careful about which friends you go into business with, you could end up losing both your friends and a lot of investment opportunities.
Pro — Complement Each Other’s Strengths
However, if you do choose the right friends to go into business with, you could end up being an unstoppable team. If your business partner is really detail-oriented and great at research, he or she will be perfect for tracking down leads and identifying great deals. If you’re a natural people person, you’ll be able to do the negotiating and closing on your flip deals.
The best part about teaming up is finding out how you can complement each other’s strengths. Take Greg and me, for example. I’m the real estate expert, and he’s the financial guru. I’ve been in the real estate investing business for years, and I can definitely find money if I need to, but Greg’s really the best. It makes more sense for me to focus on the parts of the business that I have expertise in — finding, fixing and flipping houses — and to let Greg work his magic on the money side.
Basically, if you choose friends who have similar goals, who are dedicated and whose strengths complement yours, you’ll be on the road to creating a really lucrative house-flipping business.