Joint ventures (JV) are an excellent way for up-and-coming property developers to get the funding they need to complete their development projects. In creating a partnership with another property developer or investors, not only can the necessary funds be pooled together, but resources can also be combined.
- What should you be looking for from a Joint Venture Partner?
- Number 1: Financial Stability
- Number 2: Working Relationship
- Number 3: Experience and Industry Knowledge
- Number 4: Confidence
- Number 5: Track Record
- 5 Things I’m looking for in a Joint Venture Partner.
- Number 1: Liking the Developer
- Number 2: Honesty
- Number 3: Willingness to Learn
- Number 4: Drive
- Number 5: Calm and Professional
In a JV, the responsibility for profits, losses and costs associated with the development project is shared between the partners. So, the big question you need to consider is how do you choose your JV partner?
Read on for my top tips on how to ensure you complete your due diligence when choosing a partner and entering into a JV agreement.
What should you be looking for from a Joint Venture Partner?
Number 1: Financial Stability
The most obvious answer to that question and, arguably, one of the most important is financial stability. Without the financial security of your JV partner, you cannot guarantee the security of your side of the investment. And, if you have any uncertainty regarding this fact, then it can lead to doubt towards the property development project as a whole.
In addition, when choosing your JV partner, it is important to think of the entirety of your upcoming project. Not only will you need the funds for the renovation; but, you must have funds in the instance something goes wrong. Every project needs a contingency plan, and you must have confidence in your partner to know funds will be available if needed.
Number 2: Working Relationship
Aside from money, it is crucial that you have a good working relationship with your JV partner. You also need to be able to respect them. However, there is a need for boundaries.
When you decide to team up and enter into a JV agreement, this does not mean you need to spend all your time with your JV partner. Yes, you have entered into a business agreement together; but, this does not mean you suddenly need to incorporate them into all aspects of your life.
Number 3: Experience and Industry Knowledge
Remember, taking up a JV agreement is not just about financial support. You should be looking for someone with the experience and integrity to be able to help your property development project a success.
Ensure you carry out thorough due diligence into your potential JV partner so that you can do into your JV agreement with number four on my list – confidence.
Number 4: Confidence
Confidence is such an important factor in choosing your JV partner. For the project you are about to take on, you need to have complete confidence in your JV partner. You need to trust in their experience and knowledge of the industry, that they can help provide you with the guile to get your shared development out of any difficult situation that may occur.
Number 5: Track Record
My last piece of advice can help you evaluate the other four factors. By carrying out careful due diligence into your potential JV partner, you can assess their track record and guarantee your confidence in the project and the financial stability, experience and inside knowledge that will be on hand.
The uniqueness of our Joint Venture Fund is that my own experience and my team’s experience will be available to oversee your development project; we can even step in to help should circumstances require. It’s very unusual to find a financial backer that also has the ability and experience to do just that.
5 Things I’m looking for in a Joint Venture Partner.
When I’m looking to enter into a joint venture agreement with another property developer, I look for five key things before making a commitment. Without these five attributes, our shared project could stumble upon difficulties further down the line.
Number 1: Liking the Developer
For me, it is crucial that I like and get on with anyone I am going into a joint venture agreement with; if I do not have a good rapport with them, the rest of the project is going to be an uphill struggle. Quite simply, you wouldn’t go on a second date if the first didn’t go very well! Spending so much time with someone I cannot see eye-to-eye on, in sometimes high-pressured discussions, is enough for me to look elsewhere for my partner.
Number 2: Honesty
It should go without saying that I’m looking for decency and honesty within future JV partners. If something is going wrong on the development project, I cannot work alongside someone who will bury their head in the sand. I need to be able to trust that they can and will deliver bad news should the need arise. Moreover, there should be no delay in communicating such news, as this could cause additional problems to the project, adding more costs and obstacles.
Number 3: Willingness to Learn
In joint venture agreements, experience is not a priority for me. Fortunately, I have been in the business for over 40 years and, in that time, I have first-hand experience of many different property development sites. However, I am keen to work alongside up-and-coming developers who are keen to learn more. If someone is aspirational and ambitious, I respect their enthusiasm and always want to support their progress in the property industry.
Number 4: Drive
From my property seminars, the one question I get asked more than any other is, ‘How do you find your property deals?’ When it comes to my Joint Venture Fund opportunity, this is up to my partner. I welcome developers to come to me with their property development proposals and projects and help them fund their vision. Consequently, when I am looking for someone to partner with and support, it is key that they are driven and committed to their project. They need to show me they are prepared to go out and find an opportunity, willing to give up time and effort to make it happen.
Number 5: Calm and Professional
And, finally, in property, it is important to be able to keep your head in stressful situations. The ability to remain calm and professional when things go wrong will go a long way. With property, it is naive to think that nothing will go awry! Every development site has its own challenges, but what sets property developers apart is their ability to deal with those challenges. Are you someone who will plan and anticipate these problems before they occur, or will you panic?