Finding an Investor Who Shares the Same Goals
In this paper I plan to discuss the business I developed with the anticipation of finding an investor who shares the same goals. This paper will also talk about my decision regarding the legal structure that I feel corresponds with this business. I will discuss the reasons I chose partnership as my legal structure, as well as, issues that could result from my decision. I will also disclose with you the logic I found in reaching my decision. Another area addressed in this paper is other legal structures that are available for my business and some of the topics that could change the results of my preference mentioned. I will cover some factors that could occur due to legal, social, or economic concerns.
The business idea that I would like to introduce is buying and selling distressed or foreclosed properties. Within the last few years I have purchased distressed or foreclosed homes and quickly turned them around to generate a substantial return. By using proven strategies, basic key principals and strong organizational skills I have turned one investment in to several investments with a high return. However, I do not have enough man power, time or financial backing to make this business grow to the size I have envisioned.
With that being said, this is what brought me to the decision to include a partner in my business. I want to form a partnership with an individual who shares the same values, goals, and ambitions. My goal is to locate a partner who has strengths in areas that I am weak. Zahorsky, D. (2002). Historical data confirms the importance of business related partnerships. Researchers who investigated nearly 2000 companies classified the top performers as high expansion companies and the lower performers as low expansion companies. Sole proprietors account for only 6% of high expansion companies while 94% were founded by partnerships. In contrast, sole proprietors founded almost half of low expansion companies. Gage, D. (2005, July).
A few positive results that can take place from forming a partnership would be more opportunities will be made available to my business. Gage, D. (2005, July). I will have additional man power working towards the same goal. In return, there will be double and possibly even triple the profit with less effort. There are some issues that can result from a partnership; once one of the acting partners die, the partnership is then severed. Another issue that should be considered is each partner is equally liable for that business. Partnership (2009)
Another option that is available for my business is to become a corporation. Once a partnership has been established and all parties involved feel the alliance to be a positive and rewarding one. It could be in the firm’s best interest to incorporate. Incorporating the business will add an “additional layer of protection”. Zahorsky, D. (2002). The liabilities and risk will be owned by the corporation and not by the owners. An additional advantage to becoming a corporation is “increased availability of capital and easy transferability of ownership”. Battersby, M. (2000, June).
Some of the determining factors that could change my decision regarding this declared legal structure; if I can not establish a partner that fits my values, goals, and ambitions. Another factor that would change my pronouncement is not coming to an agreement on my partners pay or compensation. “It may seem logical and fair to split the share of ownership into an equal 50%. However, this ownership structure can impair decision making in the future.” Zahorsky, D. (2002). Before establishing a partnerships foundation of compensation; investments contributed and time spent in the business should be considered. Battersby, M. (2000, June).
Various legal issues could influence this business. A clear marketable title would mention one of these concerns. Precautions will need to be taken in order to properly purchase and sell a distressed or foreclosed property. Every potential property will need to have a title examination. “Before taking title at the real estate closing, a purchaser needs clear assurance that the seller is conveying marketable title to the property”. “Likewise, a lending institution about to finance part of the purchase price and take security interest in the property by mortgage or deed of trust will insist on evidence of good title”. Hetrick, P., Outlaw, L., & Moylan, P. (2008).
A social issue that could potentially affect my business is all the negative publicity from the Media regarding the Real Estate Market. “The media plays a role by enhancing the effect of the trend in the mind of the buyer” Rosenbalt, N. (2009). It has been discussed that the Media can make the Real Estate Market fluctuate which in return can have an effect on the sell ability of the houses my business will have for sale. Rosenbalt, N. (2009).
One major economic factor that may have an effect on my business is the current recession. With the current economy investors are sitting not purchasing properties due to the instability of the banking industry. Bell, J. (2009) However, foreclosures are at an all time high and this lack buyer confidence because of the economy could possibly be the biggest downfall of my business. In order to get the best return for you money you need to be prepared for the market to come back and be the first in line to selling properties, as well as, the logic behind my business proposal.
In conclusion, I have discussed my proposed business idea and what type of legal structure I believe to be the best for the current proposition. I have gone in to detail about the advantages and disadvantages of this particular structure and how it can play a roll in my business. I have also mentioned another option of legal form should certain factors take place in my business. I described some issues that could evolve due to economic, legal and social issues.
Zahorsky, D. (2002) Creating a Winning Business Partnership. Retrieved April 30, 2009,
Gage, D. (2005, July). The Rewards and risks of Forming a Partnership.
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Partnership, April 30, 2009 Retrieved http://www.business.uiuc.edu/aio/taxes/partner.html
Zahorsky, D. (2002) Start Your Own Corporation. Retrieved April 30, 2009,
Battersby, M. (2000, June). Profiting Under the Right Label. Ceramics Monthly, 48(6),
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Hetrick, P., Outlaw, L., & Moylan, P. (2008). North Carolina Real Estate Manual,
2008-2009 Edition Title Assurance,6(3),p.113
Rosenbalt, N. (2009). Media Begins Manhattan “Plunge” Effect. Retrieved April 30, 2009
Bell, J.(2009) Recession Impacts the Outlook. Mortgage Banking,69(5),62.
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