Why to Invest with Reasonable People

13 Replies

Okay so I have a bit of a rant here. Last year I did a JV deal with a guy I didnt know. He wanted to do a JV deal. After closing he decided that he wanted interest of 20% per year(because he didnt know me). Feeling like I wanted to be the better person and I agreed because there was profit to be made. We are going to closing now, and suddenly he feels I shorted him, so I agreed to the original JV terms minus the payments made. He is getting a 70.6% ROI and he feels like the deal should be better. He quoted to me, I accept this but know I am pissed. I was like um seriously. Know who you partner with before doing a deal. Just wondering all your guys thoughts or if you had a deal like this before. The awesome part is then he asked when the next deal was, the response when I told him there wouldn't be another one with him.

At least the deal was profitable.  I can't imagine what he would be like in a deal that went bad.

Cut him loose.

I don't like partners for a variety reason. One is you don't know what there thinking. 

If you do partner with someone again do a contract and get everything in writing beforehand. Each deal has something to teach you. 

Medium mogul logo web smallPeter MacKercher, Mogul Realty | [email protected] | 314.210.4414 | http://stlmogul.com

@Peter MacKercher  I had a contract, so I never had to agree to any changes but I try to deal with people like they want I want to be treated.

"The awesome part is then he asked when the next deal was, the response when I told him there wouldn't be another one with him."

I don't think you should have said this RIGHT NOW before closing.

That's like putting lighter fluid on a fire. It's easy to get emotional and bite back at people. Over time it's just business and nothing personal.

A better way would be to wait after closing and be very cordial until that point to get the deal sold.

You can simply not bring them the deals first in the future. Even if I do not like someone that much I try to leave everything on cordial terms. Things have a way of circling back around. People do  not mistake my kindness for weakness but they know I am fair. You have to carry a soft hammer in this business but it's all in what you say and how you deliver it.

Medium allworldrealtyJoel Owens, All World Realty | [email protected] | 678‑779‑2798 | http://www.AWcommercial.com | Podcast Guest on Show #47

@Joel Owens  I realize all this. I spent that better part of today making this deal happen, if I wanted to carry the heavy hammer I would have reverted to the 20% as I could have just requested pay-off and moved on, but reputation is important, he wanted me to take funds from closing an apply to a deal we are reading to close on, so I kinda had to say that.  Great advice in general

@Jeremy Tillotson  

Honestly I say no! I use to be really big on being accommodating. i find that people like to test the boundaries and see what they can get. therefore I create a contract, establish boundaries and go from there. 

This prevents the issue where he's happy and you will never do another deal with him again.

Another investor I know has a fond, oft repeated, saying: There are two types of partnerships:  those that have come to an end and those that will.

Medium greenapartmenthires 1024x1024Roy N., Louer Louer Ltd. | 1.506.471.4126

Originally posted by @Jeremy Tillotson :

After closing he decided that he wanted interest of 20% per year(because he didnt know me). Feeling like I wanted to be the better person and I agreed because there was profit to be made. 

Wait.  So, you had an agreement.  After closing he wanted to change the agreement to assure himself of what would likely be a better return.  And then at sale he wanted to change the agreement back to the original agreement because the numbers were better that way.

Is that correct?

All I can say is that you're nicer than I am.  Basically, he tried to screw you multiple times (ensuring he got the best deal for himself and by-definition a worse deal for you) and you let him.  You let him take advantage of you.

What does your existing written agreement entitle him to?  I wouldn't give him a penny more than that, and I'd be perfectly happy if he walked away pissed...

@J Scott that's more the response I was looking for to my rant. Yes you are right. But my original agreement was for a JV. BTW the ROI is on a 14 month return, (this was a land deal) he apparently thought anything under 100% wasn't good enough, so maybe I should offer to give him money at his own rates, lol. Anyways great news is I am still making well, and honoring my original (but yes modified in writing) agreement. I think to tell him he couldn't be on my next deal was fantastic. I guess I should write about I am closing on one deal to get money and using that money on the same day to do another deal.

Originally posted by @Jeremy Tillotson :

@J Scott that's more the response I was looking for to my rant. Yes you are right. But my original agreement was for a JV. BTW the ROI is on a 14 month return, (this was a land deal) he apparently thought anything under 100% wasn't good enough, so maybe I should offer to give him money at his own rates, lol. Anyways great news is I am still making well, and honoring my original (but yes modified in writing) agreement. I think to tell him he couldn't be on my next deal was fantastic. I guess I should write about I am closing on one deal to get money and using that money on the same day to do another deal.

 Still not clear what the *current* written agreement is (the one that would hold up in court)?

Is it an agreement that would generate the big JV returns for him? Or is it the agreement that would generate 20% annual returns for him?

@J Scott it currently is the modified terms for the 20%, he wanted to claim I changed the deal after closing (which I did after he requested) and took profit from him so to avoid drama and any appearance of something not being done right I agreed to revert to the JV status. I know I didn't have to just the way I like to do business. We made out great, as we always do on our land deals, so it wasn't a big deal to pay him the JV its that fact he is crying he didn't make more.

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