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Joint Venture Overview

Definition of Joint Venture - The cooperation of two or more individuals or businesses in which each agrees to share profit, loss and control in a specific enterprise.

Joint Ventures ("JV") have long been used in the business world and the real estate industry as they allow individuals to work together and bring their respective specific skill sets and/or assets to the table which in turns makes the whole greater than the sum of the parts.

JV's are a great vehicle which allows 2 or more parties to leverage their respective strengths.  Typically, one party brings money to the table, the other brings their skill set and real estate experience to the table.  When you put the two together you have the formula for a JV into a multi-unit residential investment property.

JV's are a great option for those that want to participate in the wealth creation that real estate can offer but lack the experience to select the right investment property and lack the time and / or skills to manage it effectively. 

The primary benefits of owning an investment property through a JV include:

  • property appreciation
  • mortgage paydown
  • cash-flow
  • hands-free / headache free income property ownership

With banks paying next to nothing on interest bearing accounts and the stock market showing terrible returns, partnering with a seasoned professional who has a winning track record through a JV is an option that should be given serious consideration.

THE INVESTMENT 

The amount of money required for a JV depends on the size / #of units of the property.  While each deal is unique, the typical range of funds required ranges from $50,000 to $200,000.  Pro formas are provided to investors upfront for every potential deal to allow for a thorough assessment.

TIME FRAME

The power of real estate investing comes from time.  The longer you own an investment property the greater the mortgage paydown and potential appreciation.  As such, funds put towards an investment property JV need to be committed for between 3 to 5 years.  Committment of funds is re-examined upon every mortgage renewal anniversary.