A strategy that many people use when investing in property is joint ventures, as lack of funds is a hurdle many of us face when looking to quickly build our property portfolios. This does not necessarily have to be a strategy you use throughout your entire portfolio, but it is something that can give your property business a boost and add another string to your bow.
Although property partnerships are widely used it can still be something to feel cautious about if you have not done anything like this before. Here are a few tips and points to consider when looking into whether to work with a particular person.
What are both your Joint venture requirements: By knowing what criteria you would like your potential investment partner to have, it makes it easier for you when you start searching and saves you wasting time on potential partners who do not fit your strategy or plan. This can vary from quantity of investment funds, certain background knowledge or experiences within the property field, or living within a location of interest for your investment. Your potential partner should also do the same, so you both know what each other are looking for, therefore being honest with each other up front.
Plan your strategy and goals together: Stating what end goal you both want to achieve and how you will get there is crucial to your success. By planning details of who is going to do what tasks, this will prevent you from missing off any major or minor responsibilities that will lose you money and time. When planning isn’t done property it can also cause the most friction between you and your partner, which is never something you want in your investments.
Have respect for each other: In most circumstances both you and your partner may have a large property background, and both have certain skills and knowledge that you can add to the investment. Make sure you know each other’s strengths and weaknesses and use them to their best ability. If you cannot see any strengths in your joint venture partner then you should be questioning whether this person is right for you and your investments.
Build a good long term relationship: Your joint venture partner does not necessarily have to be something short-term. If you both meet each other’s investment criteria, have a good understanding of what each other are looking for and work well together, there is no reason why you shouldn’t work on further property opportunities together. By having this kind of relationship with another property investor, this in time can help build both of your portfolios.
Build local rapport: As well as finding a great joint venture partner, you should have a trusted local network around you who can provide you with the right guidance and support you need to prevent you from making any big mistakes. Building rapport with those within the property industry, local estate agents, builders, landlords, solicitor and like-minded others is a large part of your property business and can make you very invest-able to other people looking to invest.
Make sure all tasks are set out in an organised format: It is vitally important to set out from the outset what tasks will be completed by each party involved. This is key as it will avoid confusion and mean that everybody is clear of their roles. There can be confusion and projects can break down if it is not clear who is responsible for what on a daily, weekly and monthly basis so this is very important from the outset.
This is just a brief outline of what to consider when looking to invest with others in property.
Always make sure that you seek Legal advice when researching Joint venture partnerships or partner lending. We also recommend you refer to the FCA rules and regulations on Joint ventures (PS13/3)
For more information on how you can use a joint venture strategy to help build your property portfolio, you can click here for a free consultancy.
- Peter Iwaniszewski 2015