Hard Money Lenders

J is for Joint Venture

Real estate investment projects can take many different forms. A joint venture, or “JV”, is a great opportunity for either newer investors or investors who lack access to capital.

A joint venture can be structured in many different ways and usually involves two parties who bring varying strengths to the table. A JV is a great opportunity for someone who wants to learn the real estate investing ropes,  someone who has access to capital but needs a partner to oversee the project, or some other variation of partnership.

By definition, a joint venture is a business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task. This task can be a new project or any other business activity. In a JV, each of the participants is responsible for profits, losses, and costs associated with it. (As defined by investopedia.com)

Considering a JV for your next real estate investment project?

Check out these 5 Joint Venture tips to get you started:

  1. Seek the right partner. Eager investors often jump into joint ventures that go awry because they do not take the time to “date” their potential partner. Attending local real estate investment clubs is one great way to get to know local investors who may be interested in partnering on a deal. You can also find potential partners in local investment groups on social media as well as com . Take your time to get to know the person that you are going to be doing business with.
  2. Consult an attorney that is familiar with local laws prior to entering into a joint venture. Understanding the local laws associated with a JV and the deal that you are entering into will help you to set up a solid agreement with your partner. The agreement should identify things such as the purpose of the JV, who will purchase the property, the term of the agreement, allocation of profits, termination, and insurance.
  3. Specify partnership duties. Who will oversee the project? Who is responsible for vetting and hiring of contractors? Who is contributing the financing? Who will be doing the bookkeeping? Who is responsible for marketing the property? There are many intricacies of a project from start to finish, all of which should be identified and delegated prior to signing the agreement.
  4. Make sure interests are aligned. Partners should take on the same level of risk and therefore, will have the same level of ownership and motivation in completing the project in entirety.
  5. Communicate thoroughly throughout the project. Hold regular meetings to discuss progress, changes, and upcoming deadlines. If you are overseeing a project and struggling, communicate with your partner early on and seek council together. The left hand should always know what the right and is doing throughout the length of the joint venture.

Joint ventures are a widely used real estate investing technique. Hopefully these tips help point you in the right direction. Do your research and trust your instincts.

If you and/or your partner need capital for your next real estate investment project, contact us at 732-657-2014 or www.alphafunding.com  . We will always provide you with the best combination of rates and leverage, custom to your specific deal.