3 Simple Rules To Joint Venture Success

July 8, 2014 Sam Saggers

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Joint Venture Success

Sometimes it pays to go it alone when investing in property. Sometimes it doesn’t.

Knowing what to do if you choose to partner up with others to invest by means of a joint partnership is vital to your success – both in terms of finances and relationships.

Personally, I favour investing in property primarily on my own accord; however, there have been occasions where I’ve needed to team up through a joint partnership to achieve success.

Why A Joint Venture?

Sometimes, investing with others gives you the capacity to buy better real estate. For example, perhaps you’ve found a fantastic opportunity, but you just don’t have the capital to fund the purchase.

Teaming up with a friend or even a family member – e.g. your brother or sister, or your parents – can help you pull together the resources to get the bank loan and buy the investment property.

I believe that it’s a lot better to invest through a joint venture than to simply stay out of the market entirely.

Now investment in property through a joint venture, when handled properly, can either be a “nightmare” or a “dream” deal – depending upon how you set it up.

I’ve got three rules I always follow when doing a joint venture. They may seem simple, but that doesn’t make them any less important. In fact, if you stick to these rules, you’ll be amazed at your success!

1. Have Clear Goals

Clarity is vital. You and your partners need to set out – in writing – what you want from the property investment purchase. Great confusion can arise if your goals are not set out from the start.

For example, if you were intent on building and holding a property yet your partner has other ideas (e.g. a buy and hold strategy) conflict most certainly can arise. In fact, I’ve seen good relationships turn sour over this basic, simple concept.

2. Have Clear Documentation

Put everything down in writing. Make sure that everyone knows their job roles, has a list of what is expected of them together with milestones and deadlines to assure that the project runs smoothly.

3. Have Clear Job Roles

Within your documentation, clearly outline the job roles for each party. For example, you may be the financier while your partner’s role may be as a project manager. Ensure that each role is defined in infinite detail.

In short, communicate with each other on a regular basis to ensure that everyone is clear on what’s to be done and to handle any potential issues that may arise during the process.

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