I had to put this together for the sake of future or existing JVs.
I'd love to chat about the structures I put together.
Please give open feedback on how you feel about any section, the percentages, the responsibilities, and even about the way I phrased the descriptions!
Find the Structures Here in My Evernote: http://bit.ly/JHPpartnership
I'm sure it's completely obvious to you, but there's not enough context in there for me to completely understand what you're trying to put together here (perhaps it's just because I've never done a JV on a wholesale)...I can't figure out what the relationship is, what the numbers means, etc.
@J Scott it's always obvious to the guy who thinks everyone knows what he's thinking =) Great question for clarification... Sorry about the lack of explanation!
The wholesale JVs are for the following:
- Boots on the Ground Partner
- Lead Generation Partner
- Partner to Finance Marketing
The %s listed determine the partner's payout from the wholesale assignment fee.
I'm limited on time, like many other part-time investors, so the intention of the partnerships are to help accomplish the things I don't have the time to do.
Hope that helps!
As a person who has been the money partner in lots of JV deals, I think you are seriously over complicating this portion of it.
You are asking for such a broad range of types of partners who bring any different things to the table . It almost gives the impression that you require EVERYTHING from a partner. You need money, you need research, you need leads, etc etc. You are probably thinking you are giving them the option of what to bring but it comes off badly to me.
It is not clear what skills or experience YOU bring to the partnership or what type of situation you are really seeking. You make it sound like you want several partners who might be different "types" of partners. That is too much to juggle. You want 1 or 2 consistent partners.
You need to say clearly what you bring to the partnership and what you need a partner to bring and find a match. Otherwise you are going to get an odd mix and match and it won't work. Don't try t be all things to all potential investors. Say what you are and seek the right partner...not just any partner.
You quote profit estimates but you don't provide any info on what type of properties you target. If you make $15000 on 300,000 fix and flips, that sucks for the money partner. If they are 50,000 fix and flips that could be ok. If they take 4 months, that might be ok, it they take 9, that sucks. It makes a HUGE difference. But you give no clue. Are your estimates based on guesses or real deals you have done?
Don't forget to put some thought into the JV contract you will need with your partners to protect yourselves.
@Eric Michaels I totally agree with you from a cash investor standpoint.
There are many new wholesalers in my area thought and they are looking to learn and get plugged in.
I don't have much available cash or time to invest right now so I set this structure up for newer investors to get plugged in.
The first portion (Jennings Home and Property) would be what I bring to the table which is pretty significant. I've spent most of my time putting together systems, creating software, and learning about the neighborhoods.
I agree 1-2 consistent investors would be nice, but any passive wholesaler would be hiring out bandit signs, driving for dollars, or visiting properties. That is my goal only I offer a % from the deal rather than money up front.
Good point with the target properties! I should probably add that in there.
Anybody who receives this layout is generally somebody who I've spoken with already and it isn't intended to be a marketing piece.
The estimates on the wholesale fees ($5000) serve as an average to expect from typical wholesale deals in our market ($60k-$80k ARV)
Thanks so much for taking the time to review and reply Eric. Can't tell you how much I appreciate the feedback!
I actually thought you did a good job of identifying what you were bringing to the table - you have a pretty complete list of "responsibilities" for your business. Now, you could certainly be WAY over-complicating this, but maybe that's just your style to think through things like this and that's fine. At least when people ask "how can we work together", you have several answers/options and you've thought thru the rev splits, etc. Nothing wrong with that - we do this all the time, but it's more "on the fly" and related to a specific partner (opportunity) and specific property.
A team is hugely important and having clear roles and rewards identified in advance is a good thing. The only thing I saw that was kind of a red flag to me was the use of "virtual assistants". I know people use them all the time, but I'm not a big fan of them because you assume that the call is just INFORMATION that must be collected. That's the wrong way to look at it. The incoming call is the beginning of a RELATIONSHIP and I think the people answering the phone need to be the people who DO this business, not some proxy for them. Sure you collect some data on the call, but you also build rapport and we think that is more important that the data. I lost count on how many deals we made AT THE HOUSE that did not sound like deals ON THE PHONE. So, if you must use VAs, make sure they have your calendar and can SCHEDULE APPOINTMENTS on that call. If they are just collecting data and if you - like SO MANY wholesalers we see - are qualifying or discarding leads based upon that data (in many cases NEVER talking to the homeowner) then I would encourage you to rethink your process. (Watch this FREE REI VIDEO on "The Psychology of the Seller Relationship".)
In most markets right now, there are way too many "investors" and simply not enough deals (inventory of distressed properties) to make a living wholesaling. You or your partners need to be doing $10,000 per MONTH in marketing before you'll have enough calls to require a VA, IMHO. Answering the phone and hearing the seller's needs IS THE JOB of wholesaling. Don't assume you can outsource everything and just collect checks. It does not work that way. This is a roll up the sleeves and get out there and DO IT profession. Scale comes from a HUGE amount of activity. Perhaps you can get that via these partners, but be sure you yourself have the time to do this or your partnerships won't last.
Rather than "wholesaling", we think the opportunity is to be a REAL ESTATE SOLUTION PROVIDER. If you talk to every caller, meet them at their place, and offer several options to them (quick cash deal, listing, lease option, owner financing, etc.), we think you will have the basis for a real, sustainable business that can scale over time. Good luck!
@Dev Horn thanks. I appreciate the feedback. Glad it made sense and I'm happy to see you mention this may just be my style. (Which is often overthought lol)
I had to over complicate it a bit because I was cash and time poor so I needed to create a structure for other new investors to be interested in filling in the gaps. It worked, but I think I'll be eliminating some of the sections moving forward.
I would rather pay somebody straight up to do a few of those tasks I listed above.
Plus I've met a few contractors locally who I'm going to have visit the potential deals to estimate rehabs and gather pictures. In return I'll give them the work (only 2-3 contractors).
Your point about the VAs is totally understandable. I have actually been answering the phone, but would prefer to have somebody here locally take the calls. I've recently asked my retired mother lol she has interest.
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