Mortgages, Real Estate & Investing

JV on the Rocks, Please!

Well, now that I’ve got your attention, in this post I will briefly be covering Joint Venture (JV) Agreements. But feel free to pour a drink and enjoy the read!

JOINT VENTURE AGREEMENTS: WHAT THEY ARE, HOW THEY WORK & HOW THEY CAN HELP YOU

Joint Ventures (JV) are agreements between 2 or more parties to put their resources together in order to achieve a shared goal.

Basically instead of tackling the task or goal on your own, you partner up with another person and work together. All of a sudden that intimidating goal doesn’t seem to so hard to pursue, now that you have someone to share the ad(venture) with, does it?

What’s especially great about JV’s is that they not only bring together different parties, but each party contributes a unique skillset or ability.

EXAMPLE:
Let’s consider a Joint Venture in Real Estate. One person has the funds to invest, and the other person has the credit score. It isn’t always money that has to be the resource brought to the Joint Venture Agreement.


JV’S SIMPLIFIED

Joint Venture always sounded like BIG company, BIG business to me. But when you think about it, JV’s are common in everyday life.

I remember back in University, the idea of doing a group project was almost always more appealing as it had the benefit of getting a good mark, accomplishing the task but not having to do all the work. One person was the group leader/facilitator, and the rest of the tasks were divided amongst everyone else.

I would always confidently accept the task that would help me bring my strengths to the table, and that is how it also worked for my peers.

Everyone participating shared the same end goal, and we could all contribute our unique VALUE to the team.

SOME BENEFITS OF A JV

  1. Shared Resources & Skills
  2. Shared Costs & Risks
  3. Ability to Diversify into Different Markets & Industries
  4. Ability to Invest in a Project or Venture, Even With No $$
  5. Flexible & Can be Uniquely Set-Up

BEFORE YOU ENTER A JV AGREEMENT

Like any investment in life, there are risks that need to be considered. Make sure you do your due diligence and mitigate the risks by considering the following:

  1. Who is the person you are entering the JV with?
  2. What do they stand for/what other businesses are they in? Do you share similar values?
  3. Do you share similar short/long term goals?
  4. Does the contract have an exit strategy? Does it allow for an amicable and fair exit for all parties?
  5. Are all parties contributing equally, worth their share in the investment?

    JV’S IN REAL ESTATE

    If you are interested in real estate investing and feel you could benefit from additional resources, then consider a JV Agreement. You have strength in numbers, and each side will assume the risk.

    Sure, you may be sharing the profits 50/50, but with the gains & growth in your investment, you will still come out ahead! The way I see it…

    I would rather invest and own 50% or a share of something, instead of 100% of nothing.

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