How you can use joint ventures to expand your property investing portfolio

Joint ventures is one of the most powerful ways to grow a business. Joint venture structures has enabled us to exponentially scale our property portfolio. A joint venture is really any situation where two or more people combine resources or skills to execute a project.

Generally speaking, there are two main categories for structuring joint venture. First there is profit share JV in which a project is executed, a profit is made, and that profit is split in pre-agreed shares. For example person A finds the project and manages the construction, person B pays for everything and a 50/50 profit split is agreed on the sale of the property or on the rental cashflow.

Then there is the fixed interest JV – my favourite. This is where the first party puts in the funds and the other does all the work, sourcing, developing and managing the project and agrees to pay back the first party a first a fixed rate of interest. In this case, person A finds the project and manages the construction and person B pays for everything. Then person A gives person B a X% annual rate of interest on their money.

Which structure do you prefer?

Check out next post on 7 rules for structuring a joint venture.

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