Joint Ventures

There are many reasons to bring in a partner when it is not possible to cash out a Seller. It is another way to negotiate with a Seller to do a real estate deal. In fact, your Seller may be interested in a joint venture, where they front the property and you the investor does the work.

A joint venture is two or more people in a deal.  They have a single purpose - to develop or improve the property - but separate identities.

Don't do an LLC or partnership, as that requires the investor to take on the partner's liability.  Several real estate gurus recommend to buy the property in a land trust, where each joint partner has a percent interest.  Name of the land trust and trustee are in the public record.  The trustee does not have to disclose ownership or beneficial interest, except by judge order.  The written trust agreement shows the beneficial interest and ownership.  This is private document.  

There are at least three ways to structure a joint venture, according to real estate investor Chris McClatchy:

1. The Seller pays the mortgage, if there is one - with no interest, no payment by the Buyer (joint venture partner).  The mortgage is paid when the property is sold or refinanced.  At that time the original contribution by each is reimbursed, and then profits are split at 50/50.  The Seller's contribution is not a loan, but an equity investment by each joint venture partner.  Any additional cash flow can also be split 50/50.
2. A joint venture partner may pay for the property with a seller-financed mortgage-no interest, but with installments spread over 10 years of payments.  Additional cash flow may be split and profits shared upon sale 50/50.
3. Buy-in method, where Buyer and Seller contribute equally or investor pays a low cash price.  All cash flow is divided.  Profit is divided.

These are a few ideas about joint ventures to get you started, and give you one more tool in your tool belt of negotiation options.

Happy New Year!

Happy Investing!

Investing with Others

If you will be investing with a partner, here are a few tips to guide your agreements:

• Be sure to get it in writing and reviewed by an attorney.
• Negotiate for the worst case scenario.
• If they say you don't need an attorney... RUN!
• Do your due diligence on both your project AND your partner.
• If they say you need to make an immediate decision, watch out!

EVERY joint venture, partnership agreement should be discussed with an attorney first. Better safe than sorry. Ask me how I know....

Happy Investing!

Money Partner Wanted!

Just what exactly is a "money partner?"

Many real estate investors like myself use money partners to help them purchase, renovate, re-sell and profit on income-producing real estate. Typically these are set up as joint ventures between the money partner and the investor, where either the money partner or both provide the funds to purchase, fix-up and market the property. Both are listed on title as co-owners.

A typical investment strategy for the acquisition of a portfolio of cash flow rental properties might be to buy and hold for the next 5-7 years and then cash out. A 50%-50% joint venture will include the benefit of appreciation of value, pay down of mortgage, monthly cash flow, and tax benefits.


Typically, the more experienced investor will personally perform locating, negotiating, acquiring, and managing the properties, including setting up LLC agreements, ensuring both federal and state compliance, and preparing monthly financial statements for performance analysis (subject to partner's approval).


SEC and state regulations may apply to these kinds of equity partnerships, so be sure to obtain legal advice from your attorney to proceed.


Happy investing!