A great way to earn a lot of profit is with the help of real estate partnerships. You can have a partner who can assist you or help you raise the necessary finances. This is because it can be very costly for some to invest in real estate, that is why with real estate investment partnerships, people would be given a chance to pool their resources.
Real estate partnerships are diverse, and they often use different strategies. Below are some of the common forms:
General Partnership
This is considered as the riskiest partnership because general partners have unlimited liability, which means that personal assets are liable to the partnership’s obligations. You need to be able to choose your partners carefully. General partners are also very involved with management, and when any partner enters into any contract, it will be considered an obligation of the entire group.
Real Estate Limited Partnership
One of the most popular forms of real estate partnerships is limited liability partnerships. This is because they are the safest way to work with investors. Each investor would only be liable for his portion of the property. If you also own a small share, then as a limited partner, you will not be included in the management operations. You have invested strictly for obtaining potential higher returns.
Real Estate Investment Trust
Real Estate Investment Trust offers people the chance to get involved in large real estate projects. It can also be organized in three ways:
- Publicly Traded REITs allow you to buy shares of publicly-traded REITs that are listed on the National Securities Exchange and regulated by the Securities and Exchange Commission.
- Public Non-traded REITs are the opposite of the one previously mentioned. It is not listed on the National Securities Exchange, but the Securities and Exchange Commission regulates it. It is compared to purchasing shares of corporations in the stock market.
- Private REITs are real estate that is privately owned. These can be apartment buildings or condominiums, for example.
Real Estate Syndicates
A prime example of this would be crowdfunding. This is when there are three parties involved: sponsor, investor, and the crowdfunding platform. The sponsors are the ones offering the deal, and they would also be the ones who will manage the asset. The investors are the ones who will provide the finances for the asset. Lastly, the crowdfunding platform will be the middleman for the two parties.
Commercial Real Estate Partnership
If you want to be successful in commercial real estate, then you should be in a real estate partnership. This is because commercial properties require a lot more compared to residential ones. With the right commercial real estate partnership, investors will be able to combine their capital in order to get the highest profits. These partners can share the equity and the workload to maximize the use of the commercial property.
The Bottom Line
When it comes to effective real estate investments, the smart decision that you should make is to look for partnership opportunities. Because of them, you will get to be involved with the real estate industry without the necessity of having a huge bankroll.
