A lot of real estate investors, especially the amateurs, have been investing with a partner, or two….or three…
Partners lead to difficulties in any business, and real estate is no different.
Massive frustration can ensue for everybody involved…
During the 2009 Christmas Break, I found myself going to one of Toronto’s newest hot-spots for yuppies and rich kids called “Jezebel.”
Situated at the very top of the vibrant Ossington strip, Jezebel defined everything that I hate about Toronto night-life. From the back-alley entrance, to the guest-list, to the “private tables,” Jezebel made me want to skip to age forty so I never have to deal with this crap again.
Who in their right mind would spend $2,000 on a “private table,” I wondered before, during, and after I stepped inside the velvet rope, but I soon realized that this is just what young people do these days. Two-grand among eight people (assuming girls don’t pay) is just a drop in the bucket, whether you’re actually successful or whether you are just pretending to be like 90% of the people there.
There were only two looks in the bar for gentlemen: the v-neck sweater overtop white collared shirt, and the Hugo blazer over t-shirt. I was rocking the latter, FYI…
When I got home from a night that saw me ostracized for not partaking in “bottle service,” I read a few reviews of Jezebel online. I found this little tid-bit at www.martiniboys.com:
“A team of partners that includes Adam Graham, Gus Giazitzidis and Peter Tsebelis ( Brassaii’s owners and operators), Giancarlo Spataro, Michael King (ex Kontent Publishing magnate), and Marc Kyriacou (designer of West, Jacob’s Steakhouse, Maro, and Strange Love) have taken over the old Baby Dolls strip club space and transformed it from a squalid pit of sleaze into an elegant den of iniquity.”
I immediately smirked as I thought to myself, “How can SIX partners ever last more than a few months without in-fighting?”
You know what? They won’t.
From what little I know about the night-life industry, it’s not pretty. There is no doubt in my mind that these six partners all have massive egos to go with their massive car-leases for luxury automobiles, and with the incredible success that Jezebel has seen thus far, I can’t imagine it’s very long before these partners begin to fight about something.
And thus brings me to my point about partners: personally, I feel that one is too many.
I hate partners.
I want to be in complete control of everything that I do…which could be a potential reason why I remain unmarried, but I digress…
Having a silent partner makes sense to me, but imagine having to agree on every single decision you make with your partner, let alone SIX partners! Whether you are running a snobby nightclub, or buying a piece of real estate, partners create problems.
In November, I listed a property at the highly popular D.N.A. in the King West neighbourhood. The property was owned by a repeat-client of mine whom I leased the unit for in November of 2008. His tenant was vacating the premises on December 1st, and thus we had about six weeks to find a tenant or negotiate a successful sale.
Chris had a partner in the investment named Tamara whom I had never met. While Chris had successfully flipped 5-6 properties, each time making a six-figure profit in the process, this was Tamara’s first foray into the world of real estate investing.
Chris and Tamara bought the property when the market was at its peak, and admittedly, they paid too much for it. When I leased the property for them in 2008, we also had the unit up for sale at a price that would have them net-out at zero, and we didn’t receive a sniff of an offer.
Fast forward to 2009, and we put the property up for the same price we had leased it for in 2008, $1800/month, and listed it for sale at $429,000.
We had dozens of showings both for lease and for sale, but nobody was banging down our door with an offer.
I felt that the lease market has slowed down from this point last year as everybody seems to be buying, and we would be lucky to find a tenant. Chris wanted to get out of the investment, and I began to spend more time soliciting an offer for sale.
As we moved closer to our self-imposed December 1st “deadline,” we received an offer for sale. The offer was for $410,000, which was far more than I thought the unit was actually worth.
To be honest with you, and to reiterate exactly what I told Chris, the unit was awful. Based on square footage maybe you could come up with a $400,000 value, but the layout was so awful and there was so much wasted space that I wondered who the hell would ever want to live there let alone pay that kind of money for it.
I was brutally honest with Chris, and he appreciated my honesty.
I told Chris that the offer was a blessing, especially because the unit would be vacant in a few days with the tenant leaving, and the closing date was for mid-December which would enable Chris and Tamara to cap their losses at a half-month.
But Tamara insisted that we sign the offer back at the full asking price of $429,000, which we did.
The buyer was not pleased, and after I calmed the waters a little bit, they came up to $420,000 – still far more than I ever thought the unit was worth.
So we signed it back at $427,000, and called it our “final offer.”
I thought it was absolutely nuts, seeing as we hadn’t received an offer for lease, nor had we any other interest in the unit for sale.
The offer lapsed, and a week passed, and then I received an offer for lease at the full asking price of $1800/month. I passed this along to Chris and Tamara and told them to make a decision quickly, since the unit would be vacant in two days, but Tamara wasn’t having any of it. What “it” actually is, I’m not sure. She just cut off all contact, and seemed to disappear.
December 1st came and went, and the unit was now vacant.
But the original buyer came back and made a reverse-offer of $427,000 which was the last price that Chris and Tamara had signed back at! I thought we had really lucked out, but Tamara refused to accept the offer despite Chris’ pleadings.
During the next week, we received two more full-priced offers for lease at $1800/month, and the buyer was waiting on pins and needles to hear about her $427,000 offer.
Tamara put the halt on the entire process, and decided that she didn’t want to move on anything. I never spoke directly to Tamara, so everything I’ve heard is second hand. But from my perspective, I have a listing for lease and for sale that I have essentially negotiated full priced offers for both, and yet one of the two partners is holding up any deal.
I have never met Tamara, but I suspect she is a rather difficult person. At one point she told Chris that “her agent” believes the unit is worth more than $429,000 and he can do better. I told Chris that if this other agent can do better, then I challenge him to do so. I will put my reputation on the line, compare TREB stats with him any day of the week, and even fight him in the Octagon if necessary…
Guess what, folks? It’s January, and these two “partners” have now lost two months rent and the unit is still unsold.
Next time you think about investing with your “best friend” or even your cousin, think again.
If you need me, I’ll be sipping an $18.00 vodka at Jezebel…Back To Top Back To Comments
at 11:25 am
That’s got to hurt. I’ve thought about having a partner in an investment property, but it’s not something to go in lightly. A very detailed contractual agreement should be made, outlining timelines and clauses for getting out of the investment or dealing with disagreements. Investing in a property with a partner is the same as investing in a business with a partner, and it’s shocking to see how little planning and goal-setting is actually done.
at 3:03 pm
You have to know ppl at jezebel to get the full experience. Next time make friends with bartender named fish and tell him u used to frequent brant house where he worked before hand. And not everbody there is using bottle service thats only for the ppl who dont know ppl that work there. Its an awesome spot.
at 4:18 pm
lol I use to frequent Diamond Dolls… that’s back when Ossington street was cool
at 10:54 pm
Actually, the odds of a partnership working is significantly reduced if one fo the partners is a woman. Women are absolutely impossible to work with – and almost impossible to live with! Most men are usually able to find a compromise but most women insist on their way or nothing. ARRRG!
I doubt you’ll published this comment .. and I bet you that vodka that you feel the same!
Ever dated a guy 😉
at 12:21 am
No, I have never dated a guy, or even a girl that looks like one.
But I would like to add that I, in no way, agree with your comment in part or in whole. Nor do I accept any responsibility for the lashing you may subsequently take…
at 11:33 am
No offence, but the thought of going to a place where I have to chat up the bartender in order to get “the full experience” sounds; a) pretentious, and; b) way too much work!
Come to think of it, I think I need a bit more of an education on what the experience is like, “when you know ppl” – maybe I am missing something. However, I have a feeling that I am not part of the demographic that falls under the “need to be seen” category – as such probably wouldn’t be at this venue in the first place.
All that being said – I fully support bars like Jezebel, if they are a successful business and are pumping chumps for overpriced vodka’s it can only stimulate investment in the area and surrounding businesses. Just because I don’t identify with the crowd, doesn’t mean I don’t support the business that is making money off them! More power to them!
at 5:34 pm
I’m surprised they didn’t include a Shotgun clause in their partnership agreement.