Interested in Property Development Joint Ventures?
We may be able to help you if
- If you have some spare cash & you’d like to diversify your investments
- If you have untapped equity in another investment property or your home
- If you have a developable property but don’t have the ability yourself to take things further
What are Joint Ventures?
Joint Ventures are similar in some ways to a Partnership but differ in several important ways. Joint Ventures are a contractual business undertaking between two or more parties. One key difference though is that a partnership generally involves an ongoing, long-term, business relationship, whereas a joint venture is based on a single business transaction. Another is that the parties to the JV are not legally bound to the other members as they are in a partnership.
So, a Joint Venture, often referred to as a “JV” is a business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task which In our case here at SCM, are small to medium size property developments here in Brisbane. The resources pooled are usually money but can extend to skills or other assets, such as land or property, that benefit that particular JV.
Recent Joint Ventures:
Whilst Joint Ventures are not the main part of our business, [managing individual client’s projects is], two JV’s that we have completed in the past 12 months are this one at Herston in 2016 and this one at Everton Park in 2017. This one in Alderley was completed 7 years ago.
Why join a Joint Venture?
There are many and varied reasons why people become involved in J V’s, some of which follow
- A desire to invest but inability to go it alone
- Limited borrowing capacity
- Lack of confidence or necessary skills required
- A desire to spread their investments across several types or classes
- Understanding that a share of something beats 100% of nothing
Important Features of Successful Joint Ventures:
- Experienced management skilled in the particular endeavour of the Joint Venture
- Like minded participants with common interests and goals
- Full legally drafted agreement documentation that sets out all aspects of the Joint Venture
- A project that has a realistic chance of success.
The Devil is in the Detail:
The ‘Joint Venture Agreement’ document is a crucial element towards avoiding trouble later. In saying this we’re not saying that this document absolves ‘Project Risk’ because there is risk in any project or venture whether being a joint one or not. It’s the very fact that it is a ‘Joint’ venture that necessitates a thorough agreement so that all the parties have an understanding of their rights, responsibilities and expectations. The agreement typically covers things such as, but not limited to…
- The Project description and its goals or specific intent
- The mutual rights, responsibilities and duties of the parties
- The resources contributed by the parties
- The rights to share in the profits or losses of the JV and how these are apportioned
- The management of the Joint Venture
- The requirement for all parties to act in good faith
- The proceedure involved to terminate the Joint Venture