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What is the truth about getting cash partners for a JV?

Discussion in 'Renovation & Home Improvement' started by Mario Llige, 19th Feb, 2016.

  1. Mario Llige

    Mario Llige Member

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    I've attended property investment clubs, courses, seminars, and watched videos, and many of them say that you can get someone to fund your project as a cash partner in a JV. Has anyone done this? Was it easy to find willing partners? Any problems?
     
  2. thatbum

    thatbum Well-Known Member

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    The truth is probably somewhere along the lines of "good luck finding someone" and then even if you do, the other truth is "JVs are a minefield of potential problems and usually not worth it".
     
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  3. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    I've got a client who's doing JVs with a builder. The builder gets a large cash injection to get the project off the ground, he gets a unit at about 20%-30% below market value.

    The question is what do you bring to the deal? In this example the builder is bringing the site, decades of experience to execute the deal, plans, permits, project management. If all you're bringing is a potential site and some ideas and willingness to do work, that's not enough.

    They also worked together on a substantial development prior to doing JVs. There's a decent element of trust sealed with a contract.
     
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  4. dabbler

    dabbler Well-Known Member

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    One of the biggest issues between people is money,....ok.... so you have 2 mil you worked hard to get, I am looking for a cashed up partner cause I am eager to start building and making money, will you jump in with me when I ask you to put your money down ?

    BTW... it is a minefield even to do a joint venture if you both have the cash if things start to go pear shaped.
     
  5. Mario Llige

    Mario Llige Member

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    @thatbum - thanks for your answer. What do you think the problem would be in finding someone? Trust? Low returns?
     
  6. Mario Llige

    Mario Llige Member

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    @Peter_Tersteeg - Thanks for your answer.

    So a good start would be to bring all the things you mentioned to the deal AFTER developing a trusted relationship. Am I understanding you correctly?
     
  7. Mario Llige

    Mario Llige Member

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    @dabbler - Thanks for your answer. From what you and the others have said, it looks like an issue of trust, experience, compatible goals and trust (again). Got any suggestions on how to overcome this?
     
  8. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    Yes. This client has a block of land and engaged the builder to put 3 units on it. It was a great deal in itself but it took quite a bit of work to get the great result. They built a lot of trust over that period and have started to do various JVs together which is also getting great results.

    He's essentially bringing funds to the table to get the projects off the ground, the builder is bringing the project and executing it.
     
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  9. dabbler

    dabbler Well-Known Member

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    Do things yourself or with wife or legal partner, if the other side is the one that has the money, then add enough value that it overcomes any objection ?
     
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