Property Manager · NJ · Member since 2017 · 786 posts · 396 votes
I have a question for new investors out there.What's stopping you from teaming up with each other or more seasoned investors to do JV deals? JV investing can help you to learn the business and to increase the size of your portfolio as the partnership will increase your buying power. I ask because I get several questions from investors on a daily basis but seldom does anyone ask about JV's.
Rental Property Investor · Member since 2019 · 75 posts · 54 votes
6y
I think the two main mindsets would be 1. Fear. Scared to ask, scared to look like an amateur, and scared that they would actually be taking the leap. A seasoned investor is going to keep things moving and hold them accountable. And 2. Greed, if you JV you split the profit.
Not saying everyone has these or anything or these are the only two. Just think that deep down, they are the most popular.
Rental Property Investor · Member since 2019 · 75 posts · 54 votes
6y
I think the two main mindsets would be 1. Fear. Scared to ask, scared to look like an amateur, and scared that they would actually be taking the leap. A seasoned investor is going to keep things moving and hold them accountable. And 2. Greed, if you JV you split the profit.
Not saying everyone has these or anything or these are the only two. Just think that deep down, they are the most popular.
Philadelphia, PA · Member since 2017 · 824 posts · 1k+ votes
6y
I'd be down, personally, but I think people are worried about trusting others in general. I've met plenty of investors and have thought of it, but I think a general lack of trust and inexperience prevents it.
Could be smaller items, like not thinking it's worth it if it's a small deal, but I have to assume most are just gunshy about getting into a deal with a stranger, or even someone you know.
Vaughn, I'm entry level right now and my response would be from a lack of experience. For example as I'm looking at my timeline/plan I am focusing on learning, gauging risk, and focussed so much in how to make it all work. I have found many posts/podcasts/articles that dog in newbie investors as being time wasters, unreliable, and an overall risk. So for me that stereotype is intimidating to approach, but with that being said once I get my footing, I will seek out and leverage the hell out of someone's desire and drive to get into the business...I'm the newbie right now, but experienced enough to know that when enthusiasm is harnessed it's an amazing motivator!
Rental Property Investor · n/a · Member since 2019 · 143 posts · 117 votes
6y
JV on a project is something really appealing to me for the exact reasons you mentioned. Right now I have one rental, but this strategy seems like a great way to learn and help each other scale. I would love to team up and learn the lead generation, hard money, and rehabbing process of buy and hold investing. I guess what is stopping me is finding the right person. For now I am going to the local meetups and networking and seeing where that leads.
Property Manager · NJ · Member since 2017 · 786 posts · 396 votes
6y
@Robert Webb I think you're onto something on both counts. I also find it interesting that people wont look past their current deal, I tell people all the time, in building your portfolio you may have to employ all types of strategies, rates of return etc.
Real Estate Broker · Sarasota, FL · Member since 2016 · 157 posts · 65 votes
6y
My opinion is people with experience aren't going to take the liability in the JV to have someone less experienced and qualified working with them. JV's should be structured as a win win, my question would be what does the less seasoned investor bring to the table. On the topic of new investors JVing, go for it however I see this as a massively risky approach and would never advise anyone to do it.
What most forget about JV's due to their focus on raising capital, flexibility, or broadening your investment horizon is that it is a partnership and if you think Real Estate investing my be stressful at times throw a few inexperienced partners in along with money they are looking at and having to work together as well as manage emotions and you have a perfect storm.
The point I am trying to make is the successful JV's I see are comprised of experienced investors who have opened their financials to each other, as well as background checks or any other verification of finances and more importantly character to have a comfort level with one another. Very few if any do their due diligence prior to a JV since they are so focused on due diligence for the property. In the end if the JV fails it all fails.
Flipper/Rehabber · Matthews, NC · Member since 2019 · 198 posts · 239 votes
6y
@Vaughn Smith I've been struggling with the answer on what I would gain from JV'ing. I've had a number of people approach me (They start the conversation with "I'm new....you want to JV?"), and if I could see why it would work, I would do it in a heartbeat. The last guy that talked to me, wanted to give me 30K on a project that was a 275K buy, 60k rehab (for a flip) and wanted 40% of the profit (ARV...around 410K. I didn't need the money. We are a GC. My husband is a realtor (I will be soon as well.). I brought the deal. I really liked the guy. Lots of enthusiasm. Very little experience. So if someone could explain a great way to JV where it is worth my while, I might consider it. But I can't figure out how to get the math to work and the effort. And I have yet to have someone come to me with a way that makes sense.
Philadelphia, PA · Member since 2019 · 20 posts · 17 votes
6y
I am a newbie investor and I would love to JV on a deal! I am a couple of weeks away from closing on my first property which will be a house hack but I am interested in wholesaling and growing a rental portfolio. I have a fear of JVing with a newbie since I am a newbie as well; I definitely would prefer to partner with a seasoned investor on my first JV. I just need to understand how to right the contract to protect myself.
Philadelphia, PA · Member since 2017 · 824 posts · 1k+ votes
6y
@Laura Dantel what I've heard...take it with a grain of salt...is to ensure contracts are not 50/50 (e.g. 51/49 in terms of control, even if you split profit 50/50) as someone needs to be able to make the "final decision" when those are needed. A lot of disagreements come up because two entities cannot make a decision and have no recourse when an impasse comes up other than litigation and/or arbitration, which costs time and money.
You also want to have exit strategies you both can agree on. If X happens, we will do Y, unless Z, type of scenarios. Spending a few hundred bucks on a lawyer that can draft an amenable solution would be best.
Queens, NY · Member since 2018 · 4 posts · 2 votes
6y
@Vaughn Smith agree! Sometime before people JV it's also to have an accountability system. Here's a sample agenda for a call with your accountability partner. Does anyone have any further suggestions?
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1. Weekly High And Lows⠀
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2. What Big Goal are you working towards⠀
2a. What was your commitment last week?⠀
2c. Did you accomplish it?⠀
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3. The Hot Seat⠀
3a. Select one person from the group and help them walkthrough their issues or goals⠀
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4. What are you going to commit next week?⠀
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5. What’s the most important next step you are going to accomplish?
Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
6y
It’s like any relationship you have to both be on the same path . I can think like my partner and know what he is going to say before he says it . Splitting yourself into two can allow you to do more and do it much quicker . If done right it can be the difference between walking and flying
Morris County, NJ · Member since 2020 · 5k+ posts · 2k+ votes
6y
@Vaughn Smith
Few thoughts come to mind:
I don’t train my competition
Myself and others find the competition in NJ pretty fierce. So, how do you split it for both parties make money? (eg An acquaintance of mine is doing her first and purposefully NOT expecting to make money just so she can learn and experience the process)
Like any other partnership, the two parties need to have compatible temperaments, goals, styles, etc...
Developer · Boise, ID · Member since 2020 · 173 posts · 198 votes
6y
JV's can work good if everyone knows their role and that also means understanding who is the teacher and who is the student. If a newbie is willing to bring their A game, a can do attitude, a reason for someone with experience to JV with them (money) and a willingness to follow then there should be success. I have seen it work and I have seen it fail, and its all in the attitude and roles of the partners.
One of the first things to get tossed out the window is the teacher/student roles and attitudes. I have also been approached about a deal they have that with my construction company, connections and capital "we can be partners and split every thing 50/50". That scenario is not ever attractive to an experienced developer. One of the necessary things for the newbie to understand is who needs who and there shouldn't be fear involved in that, just common sense.
I get it you have a potential property, but that is not worth 50% of the profits. Everyone should really sit down and evaluate what that is truly worth and then both parties bring additional value to the deal. If I am bringing my expertise, you can at least take care of the capital being brought to the deal! Then it makes it easy for me to teach you how to do the deal.
Property Manager · NJ · Member since 2017 · 786 posts · 396 votes
6y
@David M. In NJ specifically I think people have to team up and go commercial in many instances to make a solid profit (especially if investors arent using cash). In many instances 3-4 units will allow you to break even 5 units will often give you a small profit but when you get past 5 units the cashflow can get a bit more robust. Commercial is a different ballgame than residential but its something I think people should consider.
Specialist · Delran, NJ · Member since 2016 · 2k+ posts · 951 votes
6y
What gives you the idea that people don't JV? Most of my closest real estate friends have a partner or partners including myself. I think the difference is there's a lot of newbies who run around looking for a partner, because at the heart of it they have nothing to offer i.e. experience, money. Typically not what people look for an ideal partner. The partnerships I know are built organically over time.