Although there are are individuals who make real estate loans, such financing is not particularly common, especially on a long-term basis. Those with cash have many options, and interest-paying real estate loan are just another ho-hum choice.

Some people with capital want more than interest. They want participation. A piece of the action. Equity. They want a stake in the property as partners. The question is: Do you want them?

Partners can bring in money as well as skills and the idea of partnership should not be overlooked. Giving someone an ownership interest in exchange for work, capital, or risk may be a sound strategy, particularly for first-time investors.

But what if you want to control your property? Partnerships, by definition, mean control is diluted. Your freedom to act quickly and independently may be lessened - if not ended.

Partnerships represent relationships with other people and in the short term such relationships maybe workable. But for long term investment, partnerships can pose difficulties. Individual interests diverge. You want action, a partner wants inaction. You want to sell, a partner wants to hold. You want to refurbished, a partner wants a bigger dividend check.

But what if you need money? Can you just turn down an investor who wants participation?

It's going to be tough to ignore demands for a partnership if you depend on a single investor. The investor will know that his capital or talent crucial to the project, and your bargaining position will be demolished.

The two way to avoid unwanted partnerships and still raise capital is to deal with more than one funding source. Then, when the question of equity participation arises, you can always say, "well, I can get money, funds are available from several investors. The only question is where I can find the best deal. If you want to go ahead with a loan, I can offer a top interest rate. Of not, I will understand."