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joint venture's and money partner's

Discussion in 'General Property Chat' started by the world is your oyster, 24th Jan, 2016.

  1. the world is your oyster

    the world is your oyster Well-Known Member

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    Hi all investors , My name is Daniel I have just signed up with the results mentoring and this year I plan to find in a area that is in high demand and buy a house to renovate and subdivide and possibly build a house/unit and sell them all for a profit
    * is there any other investors that have done simerler deals I was wondering?
    • what is a fair profit to the money partner if I was to be the skil person and work on getting the whole deal done and use the money partner's money ?
    • what sort of legal contract did you have in place ? or you suggest ?

    I guess more questions will come to mind I just wanted to start a thread to help get myself and others in the zone of leverage looking forward to hearing answers
     
  2. Ace in the Hole

    Ace in the Hole Well-Known Member Premium Member

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    Welcome.
    Sounds like some pretty advanced stuff your talking about.
    All I can offer is to do your research thoroughly before jumping in and good luck.
     
    Last edited: 24th Jan, 2016
  3. Travelbug

    Travelbug Well-Known Member

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    Have you asked your mentor? They should know all this stuff.
    Have you bought any other property or are you new to property investing? Have you got renovating expertise/knowledge? You have to prove to the money partner that you can hold up your end of the deal.

    As Ace in the Hole says- that's pretty ambitious if it's a first time project.

    Hope it all works well for you.
     
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  4. Ian Macleod

    Ian Macleod Active Member Premium Member

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    The contract will be determined by the agreement you reach. You will have many things to consider, such as the type of structure that best suits your arrangement. +Terry_w has written an excellent article about Joint venture structures here.

    Apart from deciding how the profits should be shared, take a few moments to think about some issues that might arise in a worst case scenario, that would give you a reason to want to head for the exit. Jot these down, and think about the mechanics of how this would work within the terms of your agreement.

    Here are a few more questions to consider when planning your Joint Venture.

    What happens if the project needs more funds than initially planned?

    Who will have the majority control of all decisions regarding the development?

    What happens if one partner can’t meet their obligations whether it be through illness or some other circumstances?

    How will disputes be resolved?

    Whatever structure you decide upon the contract will define a path to be followed when the unexpected happens. After all, if everything went to plan all the time you probably wouldn’t need a contract at all.

    Maybe some of the people here with more practical experience could raise some of the issues that they have had to deal with in the past.
     
    Last edited: 24th Jan, 2016
  5. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    And consider the 4 disasters:

    1. Death
    2. incapacity
    3. bankruptcy
    3. divorce

    of you and/or the other party.
     
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  6. Leo2413

    Leo2413 Well-Known Member Premium Member

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    Your going to need someone who has some development experience and also general property investment experience. Because this is your first IP/deal?

    Also to be honest if your a complete newbie (my assumption) then you don't bring much to the table in terms of expertise/knowledge/experience, so really the only assets you might bring in is equity/serviceability.

    Some of the questions your asking have very detailed answers too. Make sure you don't go into something that's over your head to start with mate.

    Just my opinion.
     
    Last edited: 24th Jan, 2016
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  7. Ace in the Hole

    Ace in the Hole Well-Known Member Premium Member

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    Bit scary as it seems OP wants to be the deal maker and is seeking a money partner.

    Creative deals are all good, if you've got plenty of runs on the board going solo.
    Bringing in partners just complicates matters even further.

    Gotta walk before you can run.
     
  8. willair

    willair Well-Known Member Premium Member

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    Without the money factor you will not even to be able to make a offer,then you would have to work out who's name goes onto the title,then have a exit plan, as far as the profit and who get what%,most would want a 50/50 split in after tax dollars..
     
  9. Leo2413

    Leo2413 Well-Known Member Premium Member

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    Agree @Ace in the Hole . Otherwise the risks are just too great imo.
     
  10. dabbler

    dabbler Well-Known Member

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    Add to that...

    Mental instability or capability issues (where no doctor is involved)
    Just plain deciding to stuff you up at any cost
    Or just plain polar opposite at some point so no further agreements possible, or breaks agreements

    These things mean litigation, let's just say, it costs a lot and can take lots of time
     
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  11. S.T

    S.T Well-Known Member

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    What does results mentoring tell you to do? What's the advice they give you for this type of structure?
     
  12. the world is your oyster

    the world is your oyster Well-Known Member

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    hi , I only signed up on Thursday I will be starting to work with my mentor from next week and onwards :) just asking the forum on there experiences
    I have done one Reno b4 with a 90k profit
    I then stuffed up and bought in Gladstone so been on the side lines . But since then I have completed steve McKnights property apprenticeship and are now in the results program due to Gladstone set backs iam money poor but have drilled into my education and iam now time & experience and mentor rich
     
  13. the world is your oyster

    the world is your oyster Well-Known Member

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    hi there , I only signed up on Thursday we are going to work on this in the coming future iam just asking the forum for some feedback in the mean time :)
     
  14. Travelbug

    Travelbug Well-Known Member

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    I've met a few of the Result's guys. Nice bunch.
    90K profit is pretty good. Details?
    I've done quite a few reno's but kept them all as they had good equity and were CF neutral to CF+ from day one.
    May do a flip down the track when i get sick of travelling.
     
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  15. the world is your oyster

    the world is your oyster Well-Known Member

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  16. the world is your oyster

    the world is your oyster Well-Known Member

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    hi I bought the property in newborough asking price was $89,000 with the builders and pest inspection had a few small issues I got the contract price to $76,000 I put $50,000 in to the deal
    • re wire
    • new plumbing
    • new windows
    • new plaster
    • new kitchen and bathroom
    • re line the external house and render
    • paint the roof
    • put a shed up
    • landscaping
    • new floors and carpets
    • carpentry work
    • cathedral ceiling
    • repaint inside and out
    etc done a lot of work

    but increased the price to $215,000

    I hate the idea of selling this as its positive cashflow buy $7,000 a year but the Gladstone property deal I feel I bought for tomuch and its the real lemon if I sell that and sell that I will start again with no negative cash flow

    I am looking forward to working with my mentor about this :)

    daniel
     
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  17. the world is your oyster

    the world is your oyster Well-Known Member

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    hi Ian

    thanks for the relevant points very great points to consider and something we defiantly need to face upfront
     
  18. the world is your oyster

    the world is your oyster Well-Known Member

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    thanks mate I will defiantly have exit pans in place I would only buy in a suburb with a high rental demand for incase we need to rent it if sale price really isn't there and only do a reno in a deal where stock is moving

    daniel
     
  19. Leo2413

    Leo2413 Well-Known Member Premium Member

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    @the world is your oyster

    hi Leo
    I have experience in investing so far not a great deal but not completely green .
    I bought my first property for $13,000 cheaper then asking price I done a $50,000 cosmetic reno and increased the rent buy 100% and also achieved $90,000 profit from the reno not bad for first deal I thought
    Nice one mate!

    I then stuffed up by getting led to buy in Gladstone qld I have lost all my equity and that is a high negative cashflow property . ,(I should have stuck to what I knew )
    Ouch. But your not the only one who went the Gladstone way and got stung.

    I have since been on the sidelines due to no equity I have managed to save $20,000 for next deal which I have decided iam going to do something like I did the first time a quick deal for a profit I like the idea of incorporating a subdivision for extra profit . since being on the sidelines I havnt quite just sat and done nothing I completed Steve McKnights property apprenticeship which through the course I found some great deals well below market value and have recently seen them sell for what I truly believe the investors made were 80-100k each deal that has really motivated me to do something about the Gladstone deal that is holding me back I have joined results and they have lots of experience in helping people do joint ventures and using money partners ..

    if it means I have to do two deals to make a 80-100k (40-50k each deal for me and money partner) so be it, then iam in a position to continue to grow my asset base with the education I have gained , I can look at the Gladstone deal as a lesson and it has made things so much clearer that you cant trust no slick salesman and you got to conduct your due delicence your self I now am more prepaired and treating this as a business and not as a hobby

    With regards to the above, I hear what your saying mate and i think its fantastic that the negative experience has not kept you disillusioned or become anti wealth creation etc. The only thing I was cautioning you with is that if you have no development experience, and you want someone to put in their money for your expertise and experience…then…..:) From a risk perspective it sounds quite high to me. Just make sure you get as much help as possible. Being good at certain trades is fantastic but make sure you get experienced people to check the numbers, check the overall deal you want to create and get good recommendations from consultants that you will need along the way. It’s all about reducing risk. You lost money in Gladstone not because Gladstone was bad, it was because you didn’t understand the risks. Same thing with your subdivision/development plan. Just make sure you go in with your eyes open, and get help from as many quality people as you can.

    Just my opinion.

    Goon on you mate.
     
  20. the world is your oyster

    the world is your oyster Well-Known Member

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    very valid point in my goals I have set and broken in the next 12 months I don't need to get 100k anyhow as I have a 16 year plan but I am going in very a active approach as composed to passive approach thanks a lot for your feed back always appreciate honest feedback

    daniel