I’m recent into the note business and for now have my own capital. I have bought one already but I’d like to pick up the pace. I really don’t want to learn from my mistakes.
Have any of you that have been in the game started by Funding JV deals?
Thanks (and kindly no solicitations of money; I’ve chosen a few people I’ve I would JV with).
There are many who start with JV deals. it truly depends on the individual and how comfortable they are and how much risk they want to take on. There is no right or wrong answer.
For me I did not JV with anyone to start I jumped in and learned through experience and yes I made some mistakes but nothing that costs me a lot of $. Usually mistakes involve time to be honest if you just follow what the mentors tell you (I learned and continue to learn from @Scott Carson )
If you check taxes, title and property value and are decent with a calculator then you reduce some risk (as their is always risk in a deal).
My question back is, what are you trying to find out / confirm ? The question was very broad.
I have a few JVs going on right now with new note investors who want to "earn as they earn" so to speak. I think its a great way to learn, especially if you diversify across many assets so you are exposed to various facets of the process. Of course your yield will be less in a JV, but that is better than losing all if you make a critical mistake on your own. Just make sure that you select an investor who has good experience in the specific note niche you want to learn.
@Chris Seveney Thanks. I know the question is broad but you don’t know what you don’t know thus it’s hard to articulate. (Plus I’m getting negativity from some which is only going to make me push harder). I’ll say two things though, one is I’m sitting on a good amount of cash (relatively) and hate seeing it just sitting in a bank (though would hate to lose it).
The second is I am slowly building a network. This week I am meeting with one of the top loan modification experts in the country (through a mutual acquaintance).
We’ll see what happens. By the way I follow you on social media and like the content you put out.
@Bob Malecki Thank you Sir. I heard you were at NoteExpo (I went as well) and would have liked to meet you. I will make sure to check on the investors. Actually one I’m looking at now, I know his accountant.
Thank you again Sir.
Bob hit nail on head - I see a lot more investors working with newer investors on a “learn and earn” type deal where the investor gets to be a larger part of the deal with the sponsor on the actual process
@Robert Beryl - I was in the same boat of wanting to "pick up the pace", which is why I had started with a JV partner. I looked at it as the price of doing business, the price of speeding up time by learning from others experience. If I can make 12% return AND learn the business by doing then that is a win. Having JV'd on a few NPNs I was able to do it on my own. I liked "drafting" behind my JV deals. I am a very motivated self taught kinda person...but I have to say that when I JV'd with @Gail Greenberg my knowledge and real life experience as it related to notes skyrocketed. Of course I was intimately involved in the process. I also continue to follow @Scott Carson with his educational content. So, for me my formula is this:
1) Find a mentor and JV with them
2) Keep learning the world of notes - follow Scott Carson if NPN are your thing
3) Network, network, network. This way when you are faced with something you don't know, you can reach out to your network.
4) Add value to your network - this way you aren't always taking. Be able to give back.
Hope this helps.
@Eric Hyde Hi Eric! First for some reason I thought you were from NJ, I don’t know why.
Yes I saw what you did with Gail Greenberg, congratulations on that! She seems knowledgeable. I’m connected to a lot of groups so I’m trying to network; I just don’t have much to contribute yet.
I don’t have a day job so it adds more pressure to get things done (my bills are paid it’s just I want to act you know?)
But I am from the Northeast and there is a reason they call it a NY minute :)
Thanks for adding your advice. I know a lot of people (seems like everyone has ties to South Florida even if they don’t live here) so I’ll hook up with someone to help me out (besides the help I get her or on the other sites).
Thanks again and Happy Belated Birthday!!
Thanks @Robert Beryl , always happy to help when I can! And thanks for the happy birthday!
@Robert Beryl : Yes, I have funded JV deals. I don't think it's a bad idea. I started thinking that the passive returns would be fine, but then my inner control freak took over and I thought I could do this on my own. Benefits of being a JV funding partner are that (ideally) you see what is really taking place. You can see who your JV partners are buying from and what vendors they are using. Also, depending on your goals, JVs can be just fine if they meet your ROI requirements.
Even though you've already identified your prospective JV partners, I suggest you consider the following factors: 1) Does the prospective JV partner's personality match yours? If you're an analytical engineer (or in my case, CPA) and you're dealing with a laid-back type, might not work.
2) Vet your JV partner even if you know them personally. @Adam Adams published a blog post on this recently. (Sorry, too lazy to post the link at the moment - worth reading Adam's whole blog anyway.) Maybe get a background check. No one cares about your money like you do.
3) Discuss expectations with your JV partner. How often will you receive updates? How often will you receive financials? Are all docs and invoices available online? Monthly updates and reporting is best and transparency is key. Also, you need to balance the fine line between respecting your JV partner's time and getting the communication that you expect.
4) Review the JV agreement. Is there an out clause if you end up hating each other?
I'm sure there's more - but I'll leave that for other people to comment.
Hi @Diane E. and thank you for your input. Well the one I mentioned, I haven’t met yet I just know his CPA (who happens to be mine too). What’s strange, well not so strange I guess is the guy doesn’t live in my state and doesn’t have investments here either. I asked why he used my accountant and he said his firm (a very reputable firm) is pretty well known for real estate deals.
I will look up the info posted by Adam Adams. I’ve actually spoke to him once and he was a super nice guy and wicked helpful.
Well I really detested the last business I was in (though profitable but way too many employees) I like this one so far but these first steps.... :)
I am of the opinion that putting up ANY of YOUR OWN money to fund a JV as a means of "learning and earning" is a mistake if you don't know what you're doing yet.
That said, "learning and earning" is great. Just not that way. Instead, I would strongly recommend acting as a "bird dog" or finder and then referring the notes you find to an institutional investor for a fee. Depending on the purchase price of the note, referral fees can range anywhere from $2,000 to $10,000 and you are using other people's money because the investor is putting up all of it and taking all of the risk. This way, you are earning $ but, more importantly, not risking anything AND at the same time you are learning what's good, what’s bad (what the professional buyers like or don't like and why) as well as the entire due diligence/backend process so that after you do a few of these transactions, you will be MUCH better prepared to invest in notes for your own account.
I've been working with new note investors for 20 + years, matching them up with the right funder depending upon the types of transactions they want to refer. Funders are always looking for deals. Also, I fully agree in that you need a "guide" especially in the beginning if you've never done this before.
If you want to know more about this and need help, just PM me and if you look at my profile, you'll get a better idea as to my philosophy/ methodology.
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