My Real Estate Joint Venture/Partnership Structure

Описание: After my first rental property blunder, I entered a real estate joint venture or partnership as my next real estate investment. If you are wondering what a real estate joint venture is or a real estate partnership, how to structure a real estate joint venture or real estate partnership, and/or looking to buy real estate with partners, you’re definitely going to enjoy this video!

In my previous video:    • How I Bought My First Rental Property (MY ...  , you would know I completely f**ked up my first rental property. As the next step in my real estate investing journey, I began educating myself about real estate investing, the real estate market, what the different investing strategies were and looking for the next real estate deal. This when a friend of mine, brought upon a potential joint venture in real estate to me.

First, let’s go over the structure of a real estate partnership or joint venture which is typically broken down into two categories. One person is the operating partner; their job is to do everything that's associated with the execution and turn around of the deal. Typically they'll be the one who finds the deal, runs the numbers, and does their due diligence to identify a good deal. The other person involved is the money partne; they are responsible for bringing the capital to actually purchase the property and often will be the one holding the mortgage for the deal as well. Bringing these two parties together, you are able to purchase the property, execute what needs to be done to get the valuation appraised and then refinanced to continue the process.

In my case, my buddy approached me with the opportunity to joint venture with him and another partner in a joint venture to deal. This was a great opportunity for me to get into a real estate deal with people who were experienced as well as utilize their knowledge so I can fast track my trajectory on becoming a good real estate investor. They walked me through how the joint venture structure or real estate partnership would work. They provided the purchase price; the budget on what we would expect to spend on renovations; the estimated appraisal for what the post renovated property would come for or after repair value of the property would be; when we can expect to see our cash refinance; and how we would own the property going forward. In this joint venture deal, my friend and I, together, were going to be the money partners. As the money partners, we would be responsible for putting up the capital for the down payment on the deal, cover the costs of renovation and we would be the ones who were holding the mortgage for the property. Our operating partner was the one who found the deal, executed the renovations and ensured that the money was spent strategically. We were able to refinance out all of our money and the agreement that we came to with our operating partner is that my friend and I, as money partners, would own 50% of the property, post re-finance and the operating partner would own 50% percent of the property.

The benefits of real estate joint ventures or partnerships
LEARN A LOT
I was working with an experienced investor who has done the BRRRR strategy multiple times. They knew exactly where to spend money to result in the increased after repair value. We were able to only spend $16,000 on renovations yet the after repair value of the property came in at $250 000. So that's a hundred and ten thousand higher in value by just spending $16,000. This comes from experience and knowing what you're doing in this game. So partnering with someone like that really helped me and my other partner learn and take those experiences going forward.

SCALE FASTER
Whether you're the operating partner or the money partner, doing joint venture deals will allow you to do more deals, and grow your portfolio faster. As an operating partner and you've been doing this solo on your own at the first. There is going to be a point where your capital is going to get tapped out and there's only so many mortgages that you can qualify for. By bringing on a JV partner, you're going to be able to keep qualifying for mortgages and more deals and ultimately getting a portfolio that's growing and scaling pretty fast. If you're the money partner, you're also going to be able to scale pretty quickly because you're going to be working with an experienced investor who's going to be able to continually find good deals and help you BRRRR properties out and grow your joint portfolio together.

3. TAKE ON BIGGER DEALS
You can bring on multiple JV partners and take on bigger deals, high dollar transaction deals. This way you'll get a chunk of a much bigger pie and again you take on bigger deals that can have potentially even bigger upside.

Hope you enjoyed this video! Make sure to subscribe for more content from Your Finance Boi, PV Rajan.

// F O L L O W //

Youtube:    / pvrajan  
Instagram:   / thepvrajan