We are time rich at the moment but maxed out on our access to finance so we are interested in exploring the idea of a Joint Venture. We have a suitable money partner but we aren't sure about terms and conditions etc. Can anyone help with suggestions on how to make it work. We know we have to get legal advice, but we are keen to hear general ideas from the forum.
Our initial idea is they provide the finance, we provide the time (renovation) and we spilt the profit (if sold), or rental income (if we hold). Is 50/50 fair??
Thankslook at lawcentral.com.au at their agreements, they have one for property JVs
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
I think whether 50/50 is fair depends on who wears the financial risks if things go pear shaped. If you sign up for some of that that then 50/50 profit share may be fair. If not I wouldnt want to be on the finance side of that relationship, as I could get saddled with everything and you could walk away as you really dont have much skin in the game.
Each Joint Venture will be different depending on what the deal is at the time. For instance if we’re contemplating a Joint Venture with a Land Owner. Typically, the Owner may agree to exchange his land for housing unit(s). An independent Valuer/Appraiser is normally engaged to determine both the land value and the new housing unit value and if necessary monetary funds are exchanged if they are not of equal value.
We find Joint Ventures are a great way for newcomers especially, to get started as it allows you to share part of the profits while sharing the risk.
To help us understand property Joint Ventures more, we used ‘Joint Ventures Made Simple’. It showed us how people of like minds and different skill sets can join together and joint venture real estate deals. It also includes a property Joint Venture Sample Agreement.
Adrian and Amber
http://www.RealEstateDevelopmentClub.comI currently am involved in a JV where I am the "time" partner so to speak. My buisiness partner is the finance. Many on this site said it wouldn't/shouldn't/couldn't be done. However, whilst the split is 50/50, we have it written into the contract that so is any debt liability. This alleviates the any concerns of my partner that should it go "pear shaped" they are not left with complete financial responsibility. We have a very comprehensive (and might I add costly) JV agreement that clearly sets out obligations and responsibilities and this was reviewed by each of our respective legal eagles. And away we run. If your model is good, and your management excellent then go for it.
All the best
MickHi Adrian and Amber
I like your web site. Unfortunately i could not get the audio to work.
Anyway my question was…is 'Joint Ventures Made Simple' a book to read?
50/50 was the general norm I thought. But I have also heard of a simple percentage back for there money invested. i.e. 20k over six months for 15-20% return.
I would suggest if going the 10-15-20% return…whatever you think is a fair thing for each deal….that you negotiate that first as deciding to go backward will be harder to then offer 50/50.
It depends on who is investing the money some hard nosed investors might go for the idea of 12% as a return. I think 15-20 is more realistic for me but some i know will not invest unless it's 25% at least or better.
Certainly don't make it unfair for any given persons circumstances as that will only push away people that might be potentially interested and also word of mouth that they might tell other people.
Jaffasoft wrote:Hi Adrian and AmberI like your web site. Unfortunately i could not get the audio to work.
Anyway my question was…is 'Joint Ventures Made Simple' a book to read?
50/50 was the general norm I thought. But I have also heard of a simple percentage back for there money invested. i.e. 20k over six months for 15-20% return.
I would suggest if going the 10-15-20% return…whatever you think is a fair thing for each deal….that you negotiate that first as deciding to go backward will be harder to then offer 50/50.
It depends on who is investing the money some hard nosed investors might go for the idea of 12% as a return. I think 15-20 is more realistic for me but some i know will not invest unless it's 25% at least or better.
Certainly don't make it unfair for any given persons circumstances as that will only push away people that might be potentially interested and also word of mouth that they might tell other people.
Hi Jaffasoft
Thank you for your kind comments regarding our recently launched website. We have uploaded the audio again so you will find that it is working OK now.
‘Joint Ventures Made Simple’ is an audio CD and booklet. We have Robert’s entire Made Simple series on our resources page but have a look at his website: http://www.clausesmadesimple.com/content.htm. Plus you can find out more about Robert Balanda here: http://www.mba-lawyers.com.au
Our goal is to build long term relationships with the people we work with. We keep negotiating until both parties are happy. When it comes to JV’s we’re ultimately after a win/win situation because unless we achieve this there is no JV.
Adrian and Amber Zenere
http://www.RealEstateDevelopmentClub.com
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