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Joint Ventures In Real Estate Development; So How Do They Work?
There are many reasons why you would consider joining with another person to undertake a development project in Joint Venture. Usually the most basis reason reveolves around something you don't have. Some of them may be: 1. I own land ... have capital & capacity to borrow ... but no experience. 2. I have capital & capacity to borrow ... partner has land ... both have no experience. 3. I am 'time poor' ... work full time and can't be personally involved ... Let's suppose you want to find a land owner who will put their land Let's consider the implications of entering into a JV in the first place. After all, in a JV you have to take into account another persons attitude, decision making process, (or inability to make a decision), whether they have a logical and sensible mind ... the list goes on. So, getting into a JV must have a good payback for you. Whatever you lack is usually the reason for entering into a JV. I have noticed over the years that JV's have a prime motivator, the driver of the deal (you), and the other person is along for the ride. Another example: maybe two individuals who have saved their capital, however individually it is inadaquate to undertake a project. Combining their capital and borrowing capacity will allow they to proceed. I prefer a JV where both parties are equally motivated, have different skill bases, but each regards the other as contributing equally. Don't forget why you got together in the first place. So there are many reasons for JV's. However, you must be clear as to why you are doing it, and it must be secured by a legally prepared JV Agreement. A lot of 'practical people' hate legal documents ... a JV Agreement is a legal document and both parties must understand what it says. If one of you is a bit slack on this point, it is up to the other to sit them down and go through it ... it's important! Why? Suppose the JV deal hits a rough patch and your partner says, "I didn't know that ... why didn't you tell me ... I left all that legal garbage to you ... blah, blah." Got It, have the arguments at the beginning of the deal ... not later. A JV Agreement sets out what each party will contribute, both money and effort, and sets out each parties obligations. It also sets out what happens if the parties 'fall-out' with each other as well as the division of profits or losses. There is a lot more at stake if you JV with your rother-in-Law, other relatives etc ... the term 'on-going-nightmare' is a phrase that readily comes to mind. And if one of those family JV's brake down, it dosen't matter how many pages are in the JV Agreement, or what the words say to prove that you are "RIGHT," ... as far as YOUR Brother-in-Law is concerned, you are a 'expletive deleted.' Just thought I'd get that out of the way!! OK? One more thing ... doing a JV with a rich person, when you are many levels poorer then them, is also not smart. Why? Well, in simple terms, when 'push comes to shove' money rules ... Also, if the rich guy tell you not to bother with a JV Agreement ... he appears to be saving you money ... tempting eh? ... what he's really doing is taking away your legal rights. Yep, you'll have less rights than an employee. If that's the deal ... better to be an employee! In my my ebook I emphasise the importance of getting the Structure Work of the business organised - you will build a much better development business from a secure foundation. When you are doing your interviewing of the associated professionals, try to see if they, personally, have any entrepreneutial tendancies. They may have land, houses, houses for renovation etc but don't have the 'TIME' or 'SKILLS' to do the work themselves. Don't come out and ask them straight away ... follow my ebook, do the work you want to do; that is assessing them ... but keep your antenna out for any signs of a common interest. OK, back to getting hold of some land. Get to know the local real estate agents; I mean know them well. Call in and buy them a cup of coffee, take them out of their work place; Invest your Time in finding good, well informed, dedicated agents. Believe me they are in your business community ... it's your job to find them. Appreciate that Agents are essentially self-employed, irrespective of whether they work in a Real Estate Agency ... their 'mind set' is independent. They back themselves and their abilities to provide a sales service at a That 'good income' by the way, will leave most of their 'client's' income The 'good agents' are busy; their 'time' is money; literally. So don't mess them around. Don't talk to them as though you are the Aga Kahn! You're Not. There's always a guy richer than you ... maybe the Agent! Why am I making such a big point about agents. I believe "people" get the agents "they deserve." I have heard people talk to Agents as though they were some grubby leech on society and are doing them an honor even to talk to them. To be a successful agent these days you have to be very good. Many are highly educated and choose real estate as a career for the freedom, What comes out of your mouth + body language tells an agent a great deal about you. They then wonder why the Agent never calls then ... Dong!!! Keep your 'ego' under control. Their sales success rests on their ability at 'reading people.' Remember what I say in my ebook! When you are in the development business, you are in the business of: Getting People To Do ... What You Want Them To Do That means that you have to be in control of 'How You Treat People.' While you are doing this "work" don't forget to do what my ebook tell you Last idea for finding JV people - talk to your friends - put an advert in the local newspaper seeking expressions of interest from people interested in doing what you want. OK, you've found a partner who has the land and you are comfortable with the relationship after several meetings. Important question! What value does your prospective partner put on his land that will be put into the JV? Just throwing a few figures around to give you an example. Let's say that market value for his land right now is $300,000. But he wants to put into the JV at $400,000. So if your JV Agreement involves you gaining a share of the profit, your share will be $100,000 less. Got It? Now let's say that part of your skills contribution to the JV includes a Your efforts have increased the land value significantly ... no, not six times, as house properties are valued differently to multiple unit properties. But it may have increased by 3 or more times, depending on your market. Once again the $100,000 will come off your share. Now that may be OK by you, because you are just starting out on your first development ... it is always better to KNOW what you are agreeing too. I hope this information helps you in your consideration of entering a JV. Writing things down is an aid to learning and remembering. My LAST DON'T ... Don't start any of this JV stuff until you know my eBook What I am all about, is helping you to do residential development with the RISK reduced. If it takes four years study to get a basic Degree and say another five years to get some experience, why would you think that you can enter the development business with little study -- no experience and expect to be profitable? "Residential Development Made Easy" is written by Colm Dillon, the 'Real Estate Development Coach' and is the only 'How To Become a Residential Real Estate Developer's eBook on the web; it's selling in 38 Countries, from his experience of developing $1.2 Billion worth of real estate - read more on his web site http://realestatedevelopmentcoach.com/realestatedevelopment.html
MORE RESOURCES: L.A.âs Real Estate Upfronts Reveal Penthouse A at Rosewood Residences Beverly Hills Hollywood Reporter Refined Real Estate: Unique Leschi home with lake views lists for $1,395,000 seattlerefined.com Coloradans negotiating lower fees for real estate agents with new law on horizon Colorado Public Radio Real estate mogul cautions about avoidable mistake when buying a home, explains how to avoid 'drowning' Fox Business Massachusetts real estate transactions for Hampden, Hampshire and Franklin counties May 19, 2024 edition MassLive.com Real estate transfers: May 17, 2024 RiverheadLOCAL Real Estate Newsletter Articles this Week: Housing Starts Increased to 1.360 million Annual Rate in April Calculated Risk London Real Estate Is About to Get the âSelling Sunsetâ Treatment Hollywood Reporter Mid-May Greenwich Real Estate Market Report Greenwich Sentinel Should I Buy a House Now or Wait Until 2025: Expert Forecast Norada Real Estate Investments Dodge County Real Estate Transfers Fremont Tribune The Michael Houck Real Estate Guide for May 19 Oil City News Washington state ahead of the game as lawsuit rewrites real estate commission rules The Business Journals MCB Real Estate Revives Long-Awaited Viva White Oak Mixed-Use Project Source of the Spring STAR resource center Department of Taxation and Finance Yes, there are other coastal Delaware towns besides Rehoboth Washington Blade Dutchess County, NY real estate 2024: What's on the market for $579K Poughkeepsie Journal Baltimore real estate: 4 waterfront condos for sale The Baltimore Banner Revolution in real estate: How the NAR settlement is changing the game Eden Prairie Local News Real Estate Briefs: Lakeside homes, news condos, and more news Rough Draft Atlanta Home Prices Hit Record Highs in April 2024: Trends & Forecast Norada Real Estate Investments REAL ESTATE | UPDATE | Johnson Bus selling lot for new West Bend Fire Department No. 1 washingtoncountyinsider.com VIDEO | REAL ESTATE | Construction finally underway for Taco John's in West Bend, WI washingtoncountyinsider.com Innovative Leaders Vanderstraaten and Rohrman Inducted into North Texas Commercial Real Estate Hall of Fame ... dallasinnovates.com Here are recent property transfers up to $1.28 million St. Albans Messenger James Quinn's Data Center Advisory Expertise at JLL Drives Innovative Real Estate Solutions for Global Corporations Markets Insider Oceanport's Denholtz recognized by commercial real estate organization themonmouthjournaleastern.com Westmoreland County Real Estate Transfers | Real Estate | latrobebulletinnews.com latrobebulletinnews.com Real Estate Mogul Grant Cardone Closes Largest All-Cash Multifamily Deal In South Florida This Year Yahoo Finance Routt County real estate sales at $17.6M for May 9-15 Steamboat Pilot & Today China Says It Will Start Buying Apartments as Housing Slump Worsens The New York Times OT Real Estate Spotlight of the Week: 2115 Sheridan Place The Owensboro Times Robert Willett may be targeting female Realtors in Northeast Ohio Akron Beacon Journal Number of homes for sale in Metro Atlanta increased significantly, real estate brokerage says â WABE WABE 90.1 FM Billy Joel spends over $10M for sprawling East Hampton pad with horse farm, neighbors other A-listers New York Post What's real estate wellness? 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