What is a Joint Venture?
There are many fancy definitions of a joint venture. I will give you mine. A joint venture is an agreement between two people who partner together on one real estate property to make money over time. The agreement is specific for that piece of property and has a pre-determined time frame associated with it.
Typically there are two partners in the joint venture. There can be many variations of the agreement but usually, there is a money/capital partner and a real estate expert (also known as the working partner).
Let’s deal with the money/capital partner first. This partner’s role is relatively simple. They supply the money or capital to fund the deal is in two ways. First, they come up with the cash to pay for the down payment and all closing costs including the slush fund (more on that later) for the deal. They also supply what I call the “mortgage-ability” qualifying successfully for a mortgage. They are also usually on the title for the property as the registered owner of the property. Other than signing a bunch of legal documents, that’s about it. Their role is relatively simple and they have very little to do with the day to day business of the joint venture.
The working partner, or the real estate expert as I prefer to call it, has a much bigger responsibility within the joint venture. They do everything else pertaining to the Joint Venture. They find the deal, put the deal together, carry out the day to day business of the deal and then design and execute the exit strategy of the joint venture. This list is long and it will be easier for me to deal with this as a separate topic later on.
Every joint venture has a “ JV Agreement “ for both partners to sign before the purchase of a property to be used for the Joint Venture. This agreement for me was written by a good friend who is a real estate lawyer and is used exclusively for all my real estate deals in Ontario. These agreements must be written by lawyers who specialize in real estate law. The wording and content of these agreements are very specific and need to be customized for Joint Ventures in real estate.
Kind Regards,
John C. Heeney, CEO Glenroe Lending
Glenroe Farms Limited ( Private Lending )
We build LEGACY to create TRANQUILITY
john@glenroelending.ca
519 808 7370
