At certain point, a real estate investor who owned multiple investment properties will face the bottleneck, either in financing the new deal or managing the investment portfolio. It’s time to seek the joint venture partner(s).
A joint venture agreement can be signed with one or more JV partners to execute a real estate deal. The JV partners can be a family member, friend, or people share same passion on real estate. The ideal JV partner should have the ability to come up with the cash for down payment, or credit room to borrow a mortgage from lender. You, as the real estate investor is looking out for the deal, closing the transaction, and be responsible for the property maintenance etc. depending on how the joint venture agreement was drafted.
The structure of joint venture agreement can be in many forms. In the end, it should be a contributed effort from each JV partner on their capital, knowledge, expertise, as well as intellectual properties.
JV partner who contributes the cash will win by putting the idle money into work and obtain more than average return on investment. You win by applying your real estate acumen and experience, as well as increase your investment portfolio.
The importance for a successful joint venture partnership is to have a clearly written joint venture agreement illustrating the share structure, roles and responsibilities, disputes, risks, exit strategy etc.