Is it Smart to Invest and Work in Real Estate With Friends and Family?

I have had great success working with and investing with friends and family. Not everyone will have success due to a number of factors, but I think there are many ways to give yourself a chance to succeed. There are many ways feelings can be hurt, or worse pocketbooks can be hurt. We all hear stories about how friends become enemies or family members stop talking to each other, because of a work relationship or a bad investment. I think it is very easy to have a bad experience when you work with friends and family, and it can be even easier to have a bad experience when investing with friends and family. However, in most of those cases I don’t think all parties understood what the goals, responsibilities and expectations were. I think if the proper steps are taken, investing with friends and family can be a great experience. I work with friends and family, and it has allowed me enough success to dream big and have a goal of purchasing 100 rental properties in the next ten years.

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How I started working with family

I work with a lot of friends and family and it has worked out very well. My father has been a Realtor since I was born, and I used to sleep under his desk at his office when I was three. I grew up around real estate and that helped me to eventually become a good Realtor and investor. Even though I helped out while growing up and saw my dad make good money, I never wanted to be a Realtor. I went to The University of Colorado at Boulder and graduated with a degree in finance. During the summers, I would work with my dad helping him with various real estate tasks. I thought of it as a way to get through college, but not the start of a career. My parents convinced me to buy two rental properties with them while I was in college. I was not into rental properties back then, like I am now, but they have been great investments.

My real estate career started after college thanks to family

College had programmed me to start looking for a job after I graduated; preferably with a large company that would provide good benefits and opportunities to advance. Eventually if I worked hard enough and put in the hours, I would be a top manager in the corporate world and a success! After college it was 2001 and there were not a lot of finance jobs available. I didn’t really look very hard either, because in the back of my head the last thing I wanted to do was sit behind a desk all day reading reports and crunching numbers. I decided to go home and work part-time for my dad while I figured things out. Part-time turned into full-time, I got my real estate license and started selling houses. I was not very good at selling, as I am not the best at opening up with strangers and expressing why they should buy a house. I could sell houses to my friends and family and that was about it. Thanks to my dad being generous and letting me help with his house flipping business, I survived.

Finding my niche in real estate

I stuck it out in real estate because I made ok money flipping houses with my dad and I liked flipping house. Eventually I discovered the world of REOs and listing properties with banks. I called a bunch of banks and started asking them how I could list homes for them. I got lucky and managed to get a few REO listings in the first year after I started calling banks. I went all out trying to get listings, and five years later I have been very successful as a Realtor because of REO. REO allowed me to get back to my entrepreneurial spirit and run a business through real estate.

REO and BPO starter kit

Family ties in my real estate business

The entire time I have been a Realtor, I have worked very closely with multiple family members. It doesn’t always work out perfect, but I think working with family can be a fantastic opportunity if handled right. My father and I are in the same team selling houses and we are partners in our fix and flip business. I would never have been able to survive the early years without his help. My mother helps out our real estate business with accounting and drive by inspections. My uncle helps with inspections, my aunt helps with accounting and administrative work and my brother-in-law helps rehab some of our properties. My sister is a property manager and is always available to help me with questions about investing and managing my properties. We also partner with her on our flips as she provides some financing for us.


Why I think working with family has worked for me

I have had some problems working with family, but they are usually very minor and we have always worked through them. I believe there is a reason we work so well together, we have everything in writing. Every agreement on how we split commissions, our job descriptions, how personal transactions are handled, everything is in writing. I think the biggest issue when working with friends or family is things are not put in writing and expectations are misunderstood or forgotten. It may seem like no one could forget what the commission split or interest rate on a loan is, but it happens all the time. We all get busy and all start mixing numbers up in our heads at times. Because we all get mixed up at times, everything should be in writing and signed by all parties. If it is in writing, there is no question on what was agreed upon and this eliminates many problems. My philosophy is friends and family who work or invest together should treat the work relationship as professionally as possible. The work relationship should be handled as if two strangers are working together and nothing can be left to chance.

Getting along with friends and family while working together

Another reason I work well with my family is we get along well and know what to expect of each other. If there is a family member who I know I don’t get a long with well, I am not going to work with them. I am not going to work with a stranger I don’t get along with, so why would I work with a family member when I know there is going to be tension. If you start working with a friend or family member and you know it is not going to end well, end it quickly before you ruin a friendship or relationship.

Exit strategies when working with friends and family

If friends or family members are investing or both parties have ownership rights in a business it needs to be clear how it will end. Before any agreement is made, make sure all parties know what will happen if the partnership ends prematurely or one party cannot continue their commitment. The number one problem I see is one party wants out of a joint venture or does not have the time to devote to a joint venture. Once again it boils down to having everything in writing, how many hours of work are expected, how profits are split, what happens if one party can’t continue. These scenarios may be hard to talk about because everyone wants to have success, but it is essential to have these discussions in order to avoid a disaster.

What if one party doesn’t want to sign an agreement?

Run away! The main reason someone won’t sign an agreement is because they don’t think they are actually going to live up to it. They may say we are family we don’t need anything in writing. Simply tell them my bank requires all agreements and investments be in writing or they won’t loan me any money. If the person still won’t sign the agreement, then you don’t want to work with them.


It has been great for me to work with friends and family and one of my good friends is moving to my town to work with me this summer. He hates his corporate job and wants the freedom that real estate can offer. You bet we will have everything in writing, and we will both know exactly what is expected of both of us.

Update: I bought out my parents business this summer and everything has gone great. It was a great venture together and everything ended well! My friend has worked with me since September and he has done awesome. We both know what to expect of each other and I see a lot of success in our future.



  1. Michelle June 11, 2013
    • investfourmore June 12, 2013

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