How do you navigate a Private Money JV Partner relationship?
Scenario: We are partnered in a JV deal with a (personal) Private Money lender. This is a four house project - two houses have sold, one is to be finished at the end of November, and the final house in 45 days. We are in a new market and the biggest struggle we have faced is finding the "right" contractors and managing expectations.
- We are to perform 100% of the work, including but not limited to: design, scheduling, managing contractors, accounting, budgeting, (everything that goes into flipping a house), etc.
Our profit split is: 50% of the total net proceeds with no capital invested, interest payments to be paid upon closing of the project.
Our partner is to provide the capital and funding at 6% interest and 50% of the total net proceeds.
We have gone over budget on all four projects. There were expectations on both sides that have not been met which has put a strain on the relationship with our partner.
Our partner has started withholding funds that we need to wrap up the project. We have reworked our system to try and accommodate our partner in order to wrap up these final projects but we are again, in a position where they are withholding funds.
We have requested face to face meetings to go over how we can improve and what they need from us and how we can help meet their expectations. They wanted more transparency and updates as it pertained to funds and project status, of which, I have provided those items. They did not request invoices or copies of receipts, just progress updates, financials, and better communication.
However, since that meeting, our JV partner has been delaying draw releases (which affects our contractors' expectations with receiving payment), and her husband has gone to the job sites and talked to our contractors about expectations that were not met and has pulled them aside to have private conversations. (The husband spoke specifically about their expectations with us to our contractors).
Upon the last draw I’ve requested, she is now requesting invoices for the entire project. I can provide those, however, it is going to delay my ability to continue scheduling and managing the remaining projects and I’m not sure if this is something I should suck up and invest my time in? Is this something I should have anticipated given the circumstances? Do I continue jumping through her hoops with the focus being on just getting these projects wrapped up?
Given the situation, how would you proceed? What is the “right” thing to do?
Thanks in advance!