HUGE Joint Venture Question
To start off. I bought 2.6 acres about 2 years ago. It is raw land, undeveloped. there use to be a house on the property but since then its been burned down and hauled off. Since I do not have the capital to build anything or do anything with it... my only logical option was to sell it.
There has been a lot of calls on this piece because it is close to town - in the city limits. It is zoned commercial with new access to water and sewer with really helped with the value of the property. There have been a few low ball offers but now there is a guy that is very interested. He wants to build 30+ town homes on the property to keep as rentals, and he offered full asking price!
Here is the catch! He wants me to sign a contract that puts us (me and his company) into a joint venture. He plans to use the equity in the property in order to finalize and get the loan that he wants. When I came back and asked.. why don't i do an owner finance or a wrap on the property so that we don't have to be married up in a joint venture. Well he came back with "Well if we can't do a joint venture i can't get the loan and the deal can't happen". to add - he will be getting a 2.5 million dollar loan, and showed me his plans. the contract he sent me states that I will not be liable for any loans under the joint venture.
Please help I'm excited and nervous at the same time. I don't like this feeling
Also, I've had this property listed for more than 6 months and I'd really like to sell it for full price! However, I'm a little scared to go into a joint venture agreement. I just want to keep it safe.
any feedback helps!
Here are my numbers on the deal
my purchase price 2 years ago: 45k
Asking price today: 130k
obvioulsy i really want to make this happen but I don't want too lose it in the process.
Most Popular Reply
I'd bet the guy doesn't have the experience to pull off a project like this cleanly. He wants to go from building a couple houses a decade ago to building a subdivision now... There's a big difference, and a lot has changed in a decade...
If you decide to do this, I would recommend spending a thousand or two on an attorney and get a detailedcontract written up.