Taking on a joint venture partner can offer you buy to let property opportunities that may have been unavailable to you alone. More property investment funding, different skill sets, new visions, separate ideas and varied strategies all play a part in the appeal of JV partnerships – but there are burning issues to consider and questions to answer before leaping headlong into such a business relationship.
No one wants to begin a joint project that starts off bursting with optimistic sweetness only for it to turn sour a little way down the line. For a JV partnership to work you need a suitable property investment partner and the willingness to work side-by-side, calmly confident in the other’s abilities.
So, if you’re in a quandary about whether a JV partnership is right for you, and how to pick a JV partner if it is, sit back and read our 9 great tips for weighing up your decisions.
1. Joint ventures can be lucrative and rewarding, but never rush in unprepared or uninformed.
Take your time getting to know a prospective partner and fight the temptation to trust your initial impressions. Jumping immediately into a property investment deal with someone new may seem appealing, but the risks are very real!
2. It is essential to be clear in your head about the sort of JV partner you would want to work with.
Get a pen and paper and carefully note down the positive physical, mental, emotional and experiential assets an ideal JV partner could have, and all the liabilities, flaws and weaknesses you would like to avoid them having. Consider your own personal strengths, the attributes you admire and those which you desire. This process will help you to consider the skill set you are seeking, like the “desired traits” you might list when advertising for a career role.
3. Once you have decided to give someone the opportunity to work with you, start off slowly and take on a single investment deal or small property turnaround project.
If this person pressures you for more before you are confident in their abilities, they may not be the right property investment partner. However, keep an open mind and test the waters live within this single deal, and potentially save yourself a lot of legal and operational hassle later.
4. Find someone with different skills, but a unified vision; no business or buy to let investment project can be run by entrepreneurs with identical backgrounds.
We gain our unique skills via our unique experiences, so look for a JV partner who can complement your skills rather than duplicate them. Ask prospective partners about their visions for the future, their values in both life and business, and learn what they can bring to the table.
5. Watching how your prospective partner behaves during an actual project will tell you far more than simply talking to them.
Agreeing to a small property investment deal with minimal risks gives you the chance to monitor them, weighing up their strengths and weaknesses in a live environment.
6. Clarify each other’s duties as early as possible.
Identify which roles within a project you are both best suited to, and confirm these in written form. Many of these duties will be easy to assign as you and your JV partner will no doubt be very different, but there will of course also be some areas that require negotiation. Looking forward, prepare a future org chart with all roles mapped out and your partner’s name in each of them. This will give you the opportunity to hire up over time.
7. Once the roles have been allotted and the structure of your partnership agreed, focus on becoming the best partner you can be.
By now you will hopefully be feeling confident in the partnership, so it will be time to give as much energy and value to the buy to let endeavour as possible. By being reliable and hardworking, you will encourage your JV partner to be the same.
8. Keep communication between the both of you open, honest and respectful.
When you encounter challenges, don’t aim to find a culprit by laying blame; focus on possible solutions instead.
9. Once you are in a JV partnership, don’t push into further ventures that your partner might see as a distraction or in conflict with your collaboration.
Even from that first low-risk property investment deal, you need to discuss, involve or obtain a clear agreement from your partner regarding all opportunities outside of the partnership.
We hope you find these tips helpful. If you want to learn more about property investment, or ask further questions about the pros and cons of taking on a JV partner, join the Progressive Property Community on Facebook here.
