When you are looking for a joint venture property investor for your next project, finding one is easy. You turn to the internet, do a Google search for joint venture partners in your area, and within seconds, multiple listings appear for JV partners interested in property investments. Easy enough, isn’t it?
But how do you find the right JV partner for you?
The one that understands what you are about, that has the same ideas and goals as you and that offers the same level of communication as you? That is the tough question. You want a JV partner that provides the right fit and that you can work with daily to ensure your project is successful and profitable.
At the simplest level, there are essentially two types of JV partner in a property project: investors and developers looking for finance partners and finance partners looking for investors and developers. Even if you are Lord Sugar or the Candy Brothers, sooner or later you will need to look at additional sources of finance for your projects and so that’s what we will focus on the most in this post today, although as you will see, many of the principles would apply to either type of JV partnership.
Let’s take a look at some ways that you can find the right JV partner for you before you begin your next residential or commercial property investment project:
1. Consider a variety of investors.
You don’t want to choose the first one that shows up on the Google search or the first one that responds to your ad. Look into online and offline networking events, business angel and funding circles as they hold a wide range of investors looking for projects just like yours.
2. Decide what you want from this partnership.
Are you looking for just a financial investment or do you want someone with experience, skills or contacts that can be valuable to your project’s success?
3. Make sure that they align with your values and ethos.
This is vitally important as there are many investors willing to provide funds for your project, yet they don’t all align with your core values. Are you willing to sacrifice your values and ideas for some investment funds? If not, you will need to keep searching for a JV partner that shares the same values as yours. This could prove more difficult than you think and it could also delay your project while you spend time finding the right partner. Our core values are: practical, ethical and sustainable property projects that provide win-win outcomes for all involved. We always place our JV partner at front and centre of all we do in a project too.
4. Make sure that you have a clearly documented JV agreement, which sets out the roles and responsibilities of the partners.
This is for the benefit of both sides and if done correctly can avoid confusion later. As a minimum, it should set out who does & decides what, the ownership and any revenue division including any security agreed, what sort of costs are permitted under the JV, how the project exit will happen (including contingency plans), when the agreement or project will end, how the project will be reported and communicated in and how any disagreement will be resolved. All of these provisions and more are within our JV agreement, for the benefit and protection of either side. We always provide the same level of assurance in our JV structures as we wold seek in reverse, that’s a key part of our values.
Just as it is important to find the right JV partner, it is also important to keep your project funding on schedule. Be sure to have some wiggle room in your search criteria as this will help keep you on schedule and enable you to finance your project successfully.
If you would like to understand more about how we go about our own JV projects and see some case studies, then just get in touch with Richard from Real World Property Training as he looks after our JV partners.