The best Joint Venture partnerships are like ‘a match made in heaven’. It’s a coming together of two investors (or more) with perfectly complementing skill sets. One partner, for instance, could prove fabulous at sourcing properties. A second may have exceptional construction and renovation skills, while the third could be the money person, who just doesn’t have the time or skills to do the rest. Without each other, their respective property investment ventures wouldn’t be half as successful.
So, if it’s that great – why doesn’t everyone interested in property investing get together and form Joint Ventures? Well, the difficulty is in finding those partners. How do you know they’ll pull their weight and do what they say? Are they really as skilled in construction as they say they are? Here’s our tips for finding a first-class Joint Venture partner:
- Write down a list of attributes for the ‘perfect partner’. This should cover, for instance, skills, communication abilities, personality type and general outlook. You could also create a list of ‘acceptable weaknesses’. This is a good start towards finding what could be a lifetime working relationship.
- Always do due diligence. Once you have a prospective JV partner, check out that individual’s background. Speak to people who know them, and research previous projects they were involved in. The best way to get to know all this sort of information is to befriend your potential Joint Venture partner first (certainly, this will help with the first point too).
- Have a fantastic proposal. Once you’ve found the individual you’d like to partner up with, make them an offer they can’t refuse i.e. a wonderful proposal is difficult to turn down because (a) you can back up the figures to show your Joint Venture will be a success and (b) you have answers to all of their questions that will ease any concerns. Be honest, and point out the risks too (very few projects are risk-free, after all).
- Outline the division of labour from the start. Make lists of what you expect from each other in a project i.e. who does what, and when.
- Start small. You can test out how well you work together on a project where, if it goes wrong, neither of you are going to lose a lot of money or time. See it as a practice run before you dive into a riskier project together.
- Keep communication channels open at all times. And make sure they are good ones. That means being able to openly and calmly discuss any disputes without any bad blood. Never blame each other if something goes wrong – instead, view it as a learning experience.
- Focus on your partnership. If you start getting involved in other ventures, then your Joint Venture partner may question your commitment and become resentful if you’re not available – allocate ample time to make it work.