So…I’ve seen this topic in Steve’s book’s a bit but wondering how it actually works? And if it is used much in real life? Ie, would someone (say me) find a good deal, put down a deposit and sign a contract and then look for someone to assist with securing a loan and paying the full 20% deposit? Is this common, where would you find partners, and how would you normally split profit and risk from this type of arrangement?
Its a bit late if u have alreDy entered into contract. Work out the structure in advance.
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 haven’t entered into a contract. I’m asking in advance, so I know how these types of arrangements typically work!!!
What type of deal are you looking at? It’s not clear.
You find a deal (is that it?) and the other person pays the deposit? Then what?What is your end goal? Renovate and sell?
Getting Money Partners can work but you need to have a clear idea of what you want to do And how each player benefits.
Hi Catalyst, sorry for the confusion. I don’t have a particular deal in mind, but did read about it a couple of times in books Steve has written. I’m curious about this and what types of deals are commonly struck that involve a money partner. I am interested in developments (and don’t have enough to fund the cash-flow of a development), but think I’ll probably go down the path of buying one or two under-valued positive cash flow properties and use the equity to fund further works….but just thinking about what other types of deals are struck and alternate funding options.
But the point of this post is just to gather some general information on the idea of a money-partner.
A starting point is one person provides the money and another person the time and then the profits are split 50/50. The assumptions in this are that the money partner has the cash but no time and a time partner has the expertise but not the cash.
There are many, many variations on how JVs might work and it depends entirely on the skills and expectations of both parties. At the end of the day there needs to be a signed agreement, including what will happen if the returns aren’t as planned or even worse if a loss is incurred. That way if things turn ugly you have something to fall back on.
You’ll need to find projects which provide a win/win outcome for everyone involved.
Thanks for the comments Tracey, much appreciated.
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