{"id":96416,"date":"2018-02-04T05:00:48","date_gmt":"2018-02-04T12:00:48","guid":{"rendered":"https:\/\/www.biggerpockets.com\/renewsblog\/?p=96416"},"modified":"2021-03-16T13:48:38","modified_gmt":"2021-03-16T19:48:38","slug":"avoid-joint-ventures","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/avoid-joint-ventures","title":{"rendered":"Why You Should Avoid Joint Ventures in Real Estate Deals"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Today, I\u2019m talking to you guys about joint ventures. Should you do one? Or should you not?<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Ok, before I get started, I want to talk about something. A lot of you folks have been giving me a hard time saying, \u201cHey, check this guy out. He\u2019s very black and white. He\u2019s not flexible; he\u2019s not open to opinions.\u201d By all means, I\u2019m very open to opinions. But sometimes the way I express things can come across in a very harsh or cutthroat way. I\u2019m sorry, it\u2019s just \u00a0my style. It\u2019s the way I roll. Nothing personal. I\u2019m just always excited to share my perceptions, opinions, and experiences with you guys. You can take it or leave it, and that\u2019s just the way it is. Once again, I mean no harm.<\/span><\/p>\n<h2>About Joint Ventures<\/h2>\n<p><span style=\"font-weight: 400;\">So, this is another one of those blog posts that is very black and white. Joint ventures: No; you should never, ever, ever do a joint venture. Let me tell you why. Never forget what I am about to tell you: You cannot have two cooks in a kitchen. Impossible. It\u2019s just not going to work. The same goes in real estate. I just don\u2019t believe in joint ventures. I\u2019ve done them in the past, some of them were successful, some of them were not. The majority of them weren\u2019t, and the way I particularly operate as an alpha-type character, I like to control everything. I want to call all of the shots. I just want my partner to shut up, do nothing, and let me do all the work. I\u2019ll make them the money. <\/span><\/p>\n<p><iframe loading=\"lazy\" src=\"https:\/\/www.youtube.com\/embed\/2JyJaJbg5Ok\" width=\"560\" height=\"315\" frameborder=\"0\" allowfullscreen=\"allowfullscreen\"><\/iframe><\/p>\n<p><span style=\"font-weight: 400;\">There is one way to successfully structure a joint venture. Someone can come to the party (or the table) with the capital. They\u2019re going to give you the money, and then they\u2019re going to get out of your business. You can\u2019t expect anything else from them. You have to take that money and with your experience and knowledge, you have to use that money to make a great return on investment. Whatever the split is going to be is entirely up to you and your partner to negotiate. Sometimes, it\u2019s a <a href=\"https:\/\/www.biggerpockets.com\/forums\/311\/topics\/458105-hard-money-lending-investing\" target=\"_blank\" rel=\"noopener\">hard money loan<\/a>, so it\u2019s a different type of arrangement. Other times, it\u2019s a partnership where it\u2019s a 50\/50 split. That is entirely up to you guys.<\/span><\/p>\n<p><em><strong>Related:<\/strong> <a href=\"\/renewsblog\/joint-venture-agreement\/\" target=\"_blank\" rel=\"noopener\">10 Vital Aspects of a Bulletproof Joint Venture Agreement<\/a><\/em><\/p>\n<p><span style=\"font-weight: 400;\">I truly believe one party should be passive. So give me the money and let me do my thing: Find the deal, negotiate it, buy it, close on it, renovate it, project manage it, sell it, and make sure I&#8217;m part of the entire closing transaction. Then when the funds are available, after the title company has dispersed them, divvy up those profits. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">In my opinion, that&#8217;s the only way you can successfully structure a joint venture. I have seen it way too many times\u2014joint ventures turning sour because, once again, you cannot have two cooks in the kitchen. Every cook has his or her own way of cooking, and that is the same in real estate. If one person wants to do something a certain way and the other doesn\u2019t like that idea, it won\u2019t work. You\u2019re going to have issues there. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Time is money. If you spend too much time on miscellaneous things, you\u2019re not going to get the job done.<\/span><\/p>\n<p><em><strong>Related:<\/strong> <a href=\"\/renewsblog\/2010\/03\/06\/real-estate-joint-venture-success-failure-story\/\" target=\"_blank\" rel=\"noopener\">A Tale of Two Real Estate Joint Ventures: Success vs. Failure<\/a><\/em><\/p>\n<h2>The Bottom Line<\/h2>\n<p><span style=\"font-weight: 400;\">So that is my opinion. I\u2019m not sure if any of you are doing joint ventures out there. I suggest you don\u2019t. I suggest you start slowly, doing things on your own. Then what\u2019s going to happen is, over time, once you can prove your success, and once you start doing a lot of deals consistently, there will be a lot of people who like who you are. They will like what you\u2019re doing. And they&#8217;ll be able to see the trend in the deal flow, so they will throw money at you. I don\u2019t want to blow wind up my butt here, but I\u2019ve got so many people throwing money at me every single day, it is mind boggling. My terms are very strict. Sure, I\u2019ll take on the investment, but get the hell out of my way. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">There you go. It\u2019s black and white for me like every other blog post.<\/span><\/p>\n<p><a href=\"https:\/\/www.biggerpockets.com\/real-estate-investment-calculator?utm_source=renewsblog\" target=\"_blank\" rel=\"noopener\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-91220\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2017\/08\/blog_ads-02.jpg\" alt=\"\" width=\"700\" height=\"85\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2017\/08\/blog_ads-02.jpg 700w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2017\/08\/blog_ads-02-300x36.jpg 300w\" sizes=\"auto, (max-width: 700px) 100vw, 700px\" \/><\/a><\/p>\n<p><strong><em>Hey, I\u2019d love to hear your thoughts.<\/em> Am I right? Am I wrong? Do you do joint ventures successfully? Can you have two cooks in the same kitchen? Comment below; I\u2019d love to hear from you. <\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Two cooks in one kitchen can be a recipe for disaster. The same goes in real estate. Here&#8217;s why I will never, ever do a joint venture again.<\/p>\n","protected":false},"author":1672,"featured_media":75939,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[4252],"tags":[],"class_list":["post-96416","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-deal-analysis"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/96416","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/1672"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=96416"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/96416\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/75939"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=96416"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=96416"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=96416"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}