The Qualities Of An Equity Partner
As a hard money lender in Los Angeles, I will tell you that an important aspect of our due diligence
is the measuring of the qualifications and synergies between the partners that comprise the
This blog contains the characteristics of an equity partner that make for a successful investment.
Regardless of the actual involvement of your equity partners in the real estate investment, you
will need to choose a partner not only for liquidity and the willingness to invest but for a partner
to depend upon and collaborate. The structure of the borrowing entity is secondary.
Before arriving at this point, there needs to be a high level of trust and comfort between the
partners before the specifics of the investment are discussed. The personalities need to be in
sync and the ease of communication must be evident. You and the equity partner do not need to
be best friends, but you need to be the best of business partners.
There are three traits I look for in the initial meetings with a potential borrower and the equity
partner. These traits are a passion for investment, adaptability to change, and honesty.
A venture in commercial real estate is a business rather than an investment. The business of the
deal needs to be understood and acted upon quickly. For a successful investment, you need to
align yourself with those who not only share your passion for success but also your passion for
acting boldly upon the required strategies and decisions.
A partner’s limited involvement does not translate into a limited interest. If a partnership elects
to depend upon your expertise in real estate, this should not be interpreted as a lessening of your
accountability and the sharing of information.
Always keep your equity partner fully apprised of the performance of the investment and of your
efforts toward a successful outcome. It is the decision of the partner as to what is done with the
information once received. Your responsibi