*Positive* Partnership Experiences

[zephyr911]

Since MMM's only big partnership story is a nightmare one, and I've generally heard nothing but negative experiences about them in the RE&LL forum, etc, I'm curious if there are any counterpoints other than mine.

I co-founded a 3-member LLC around the time I found MMM (~15 months now) and so far things have gone well. Partners were not friends beforehand. I just happened to get into an email conversation with a friend of a friend (really, several mutual friends) about financial matters and it turned out our goals were similar; over a few weeks we went from comparing notes to writing bylaws and filing papers. He and his brother (out of town) had been looking to get into real estate but knew nothing beyond some reading online. I had a few years of landlord experience and wanted to be a Realtor, so they agreed to split my license costs 3 ways and we threw some money together. We started with 10k each and committed to another 10k over 30 months (20k total) with another 30 months to de-leverage before taking distributions.

I've learned a shit-ton from this endeavor so far, and I like that my stake is small enough that I'd still FIRE in my early 40s if the whole thing took a shit, but big enough to possibly snowball into a real source of income. Having other people's money at stake has also made things more serious and helped me professionalize my approach. Being the agent for the partnership and collecting a check every time we buy something is just icing on the cake.

So anyway - the jury's obviously still out on whether this ends up being a good experiment, and I've already identified plenty of things I'd do differently with bylaws and expectation management in the beginning, but I'm still leaning heavily toward the positive side. Anyone else care to share a story?

[Thegoblinchief]

CheddarStacker has had a mostly positive experience with partners as, I think, a hard money lender. He's written pretty extensively about it in his journal. Pretty sure there've been other ones as well.

[Retired To Win]

I had 2 very positive partnership experiences, both with the same partner.  What made that possible was that, even though we were the best of friends before partnering, we structured our partnerships on a completely businesslike basis -- in writing -- with all what-ifs and contingencies factored into how we wrote up the marching orders for the partnerships.

IMHO, that's the key.  Make sure everything possible has been laid out in the open, discussed and decisions set in writing.  It's the unconfirmed assumptions that I believe sour partnerships.

[Guava]

I entered into a family partnership (parents, brother, and me) when I was 19 and we purchased our first property. At the time the market was pretty bad and I couldn't find work and didn't have money to contribute so I did the labor 14 hours a day while my out of state brother sent a check ever week and my parents contributed the most financially. We didn't disagree at all on this property.

The next house was three years later and I did have money to contribute this time. Everything went well. The next house was purchased this year and we have had small disagreements. Our biggest issues tend to be five opinions on everything now and time. Our percentages at each house are different and agreed upon before we begin. And with every house we learn something. Between the four of us, $500k has been added to our collective net worths. But I wouldn't do a partnership with just anyone. We realized years ago we had to pool our money to get ahead and move on opportunity. My immediate family and SO are the only people I would ever consider partnering with.

[zephyr911]

I had 2 very positive partnership experiences, both with the same partner.  What made that possible was that, even though we were the best of friends before partnering, we structured our partnerships on a completely businesslike basis -- in writing -- with all what-ifs and contingencies factored into how we wrote up the marching orders for the partnerships.

IMHO, that's the key.  Make sure everything possible has been laid out in the open, discussed and decisions set in writing.  It's the unconfirmed assumptions that I believe sour partnerships.

I think you're right, and we've actually been considering a bylaw update because a lot of the possible situations haven't been discussed. The only surprise we talked about was if a partner needs to pull out, and we're all happy with our policy for that, but we haven't strategized much about the other "what-ifs".