I haven't posted in a while on the topic of real estate or partnerships, but I'm currently involved in discussions around a potential lift out of an existing firm. I previously posted about Partnerships and how they can often be difficult if partners are not aligned. One subject I feel is essential to discuss in advance is what the long terms goals of the partnership or company are and where everyone sees themselves in five to ten or twenty years.
In any new enterprise, founders or managing partners must be aligned in vision and goals. When one partner leaves, the value of the partnership is significantly diminished. The more corporate and institutionalized a company or enterprise can be, the more it is protected from this key man loss. Essentially, in a tribal organization or a closely held partnership the value of the enterprise is the founders or partners themselves. The more institutionalized the entity becomes, the more the value is held in the actual systems and processes of the company.
In startup real estate companies, it is sometimes difficult to be an investor or essentially a passive or minor partner. Unless the company is involved simply in running money that is directed in real estate, the company is typically a budding development or REIT type of company. There aren't many assets in the portfolio yet, but the skill of the manager suggests that when deals come around or investors sign on, big things will happen.
As an investor in real estate companies, it is therefore important that they be treated like any other startup company where build up of corporate structure is almost as important as revenue generation through products or services.