There are many different elements and facets to a successful house-flipping business requiring a wide range of skills, talents, and resources. Because of this multi-faceted and complex nature of house flipping, it is not uncommon for flippers to take on a partner.
There are many reasons and potential benefits of flipping houses with a partner. It really just comes down to the individual needs of the house flipper and what skills or resources might be needed to flip the house.
Top Benefits of Flipping Houses with a Partner
As mentioned above there can be numerous benefits to flipping houses with a partner. Below are just some of the top benefits and best reasons to consider bringing on a partner when house flipping.
Financial Resources
Flipping houses is an expensive endeavor requiring ample funds to not only purchase the property but also to update and remodel the home in order to sell it for top dollar. Because house flipping can be so expensive bringing on a partner can be a great way to find part or all of the funds needed to successfully flip a house.
Keep in mind though when bringing on a partner for financial resources it’s common for the person not providing capital to provide all or most of the legwork and sweat equity to keep things fair and equitable in the partnership.
Fill in a Talent or Skill Gap
Flipping houses requires a great deal of talent and skill in a wide range of topics and abilities. Some of these required skills and talents include property acquisition, project management, handyman and construction skills, sales and marketing, as well as bookkeeping and accounting. It’s unreasonable to think that one person could successfully fill all of those roles adequately.
Because of the multitude of tasks and responsibilities when house flipping, bringing on a partner can be a great way to fill in the gaps when it comes to your own abilities or weaknesses.
When partnering up because of skill or talent-based reasons it’s important to first know your own strengths and weaknesses. Once you have figured those out you can then begin to look for a partner that might compliment your skills and help fill in the gaps.
A great way to figure out what your strengths and weaknesses are in the house flipping business is to perform a SWOT analysis on yourself. SWOT stands for strengths, weaknesses, opportunities, and threats and the SWOT test can be a great way to not only know yourself better but can also be used as a tool to evaluate a potential real estate partner. For a more thorough explanation on how to perform a SWOT analysis check out the article “How to Complete a Personal SWOT Analysis” at Thrive Global.
Help Share the Load
While house-flipping tv shows might make it seem quick and easy to flip a house, there is a lot of work that goes into flipping houses and running a house flipping business.
A great benefit to bringing on a partner to flip houses is that they can share some of the load and responsibilities that go into flipping a house. Thereby freeing up some of your time and allowing for more free time and time with family.
Two Heads are Better than One
No matter what task might be at hand two heads are usually always better than one. Having a second set of eyeballs on an issue or problem can go along way in helping to find a solution.
When flipping houses it’s not uncommon to run into issues and problems, having a partner there that has your back and can help solve the problem can be a great benefit to your business as well as your personal health.
Pitfalls of Flipping Houses with a Partner
While there are numerous benefits to flipping houses with a partner it’s important to remember that there are some negatives as well and things to watch out for.
Splitting The Profits
When you bring on a partner when flipping a house regardless of the circumstances for doing so, you will more than likely be giving up a share of the profits.
While there is no set percentage or number when comes to splitting house-flipping profits between partners. Whatever the split ends up being between you and your partner means that you had to give up some amount of the profits. Whereas if you had completed the house flip yourself you would have been able to keep all of the profits.
Remember though while this might be a negative it’s important to keep in mind when splitting those profits the value the partner provided when flipping the house. In fact, if you took on a partner to fund the real estate flip, remember it might not have happened at all without the partner’s capital meaning there would be no profit to worry about.
Conflict and Disagreement
While two heads are usually better than one, having more than one cook in the kitchen can be the cause of disagreements and clashes in personality.
So before entering into a partnership with a potential business partner make sure that this is someone you can get along with and has the same general vision and concept for the flip as you do.
Dishonest or Unethical Behavior
While people and business partners are generally honest and trustworthy there are people out there that are less than ethical and will take advantage of people and or situations. Because of this, it’s very important for you to know who you are going into business with before any partnerships are formed. Make sure to perform your due diligence when considering a house flipping partner to make sure that he or she has a good track and is an upstanding citizen in the community.
Where to Find House Flipping Partners
Potential house-flipping partners are all around even in the last place you might expect. So when looking for house flipping partners think about what your needs are and who might be able to fill those needs.
When conducting a search for a house flipping partner the best place to start is your own inner circle of people you already know and trust.
Potential House Flipping Partners
- Attornies
- A friend that already runs a successful business
- Family Member or Close Friend (Extra caution should be exercised here as many relationships have been ruined when a business goes wrong.)
- Your Dentist or Doctor
- Accountants
- Contractors or Builders
The list really is endless when it comes to potential partners for house flipping. Just remember to start with what your needs are and make sure to do your due diligence before entering into any house flipping partnership.
Tips When Flipping Houses with a Partner
- Make sure to find a partner that complements your own strengths and weaknesses.
- Always perform your due diligence before entering into a house flipping partnership.
- Make sure the house flipping partnership is a win-win for all parties involved.
- When entering into a house flipping partnership make sure that each partner has clear defined roles and responsibilities to prevent conflict and disagreement.
- When using a partner to flip houses make sure to have a good handle on the financials such as how the profits will be split, who is paying for what, what happens if there is a loss, and what level of personal liability does each partner have in the business.
- Put everything in writing even if it’s your best friend, no matter what business you’re in it’s critical to have everything in writing to keep everyone honest and to avoid conflict.
Looking for even more tips when it comes to starting a house flipping business? Check out our article “Flipping Houses as a Business 101“.
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