Am going to be aiming at local clients for now. I want to offer them hosting as well as web design. The hosting I will take care of but am not sure what I should do about getting their site design.
I need the web designing part cause I don't want to just host them and leave them on their own, looking for someone to design their web site. I want it to be a one stop
What should I do?
Should I look for a freelance designer that would design the sites for me OR
Should I look for a Web design company that is willing to partner up with me.
Most of my clients will be small businesses that just need an online presence ..eg. Plumbing service, construction companies, A/C repair ..
Thanks in advance,

Find a local web designer and partner with him. Be a host for his web design clients and make him a designer for your hosting clients.
This is what my grandpa will call "Two mangoes in one shot"

Find a local web designer and partner with him. Be a host for his web design clients and make him a designer for your hosting clients.
This is what my grandpa will call "Two mangoes in one shot"
I agree with this approach, but if there are no local designers around your area, you are bound to find some professional reliable designer companies on the internet to solve your needs as well.

You can find inexpensive designers right here on WHT.

Hello,
If I were you, I would look for local Web design firms and smaller agencies in your area. You can find them on Craigs list and many of the freelancer directories.
You are 100% correct in that offering hosting + services you will be able to build a sustainable business. Many small business owners are open to local people performing work locally, and you and the Web designer can provide hosting+design+online marketing/SEO assistance.
You might also pick a few verticals - restaurants, consumer home services, real estate agents etc. That way you can more rapidly build their Websites.
Good luck!

A local designer would be idea. Once you get your first few clients word of mouth can be a very powerful adverising tool.

Certainly check out your local Craigs List and shop here for designers.

Thank you all, for the advice..I just found a few web agencies right here in my own town!
When working with a partnership, do we have to establish a Legal Partnership Agreement??

You don't have to establish any sort of legal partnership. If you don't however aside from honor nothing binds you two for having to do business. Even if you did this contracts usually have all sorts of loopholes.