Real Estate Investing and the Psychology of Relationships
Real estate investing is all about relationships and dealing with people. In this column I’ve written about the need for trust in order to build long term symbiotic relationships. I’ve also written about using contracts to build a solid legal safety net.
So…which is it? Back in the ‘60s a management theorist Douglas McGregor originally wrote about two theories about managing relationships: Theory X, which is a negative view that assumes that people are inherently lazy, dislike work, and need (want) to be controlled, and Theory Y which argues the opposite – that people are self-motivated and will choose to seek responsibility and do good work.
So…do you control and corral your relationships with contracts (Theory X) or do seek relationships based on trust and mutual interest (Theory Y).
Well..both. And that answer isn’t as wimpy as it sounds. I’m not sitting on the fence; there’s a role for both trust and clear legal boundaries (contracts) in each relationship. This applies to you and your investment partner, you and your broker, you and your property manager - basically any of the many relationships that you have to develop and nurture as a real estate investor.
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