Property Joint Ventures – What are they & why do them?
Sharing The Spoils – Something is better than nothing !
by Adrian Stagg
Just because you may not have enough money to invest in a property by yourself does not mean that you can’t start investing in property now. Property Joint Ventures simply are a form of partnership. They are formed with a single purpose in mind – they are not usually ongoing.
Successful property joint ventures are becoming increasingly popular because they make sense. They suit people who may not have a lot of funds, or may prefer to spread their risk over more than one investment. Others don’t have the time or expertise to indulge in property investment yet recognise that it’s one of the safest investments available when managed properly. Essentially they can be a very smart property investment.
There is no set number of participants in a joint venture but commonly they would involve between 2 – 10 parties each of which may be a single investor, a company, a family trust or an SMSF. How you structure yourself in a Property Joint Venture should be given some careful consideration for issues such as tax minimisation (not avoidance – there’s a difference), estate planning, your risk profile & so on.
So, why do them? Again that’s simple to answer.
You do them because by joining in with other ‘like minded’ people it enables you to do something that you otherwise may not be able to do alone OR oftentimes to get into much better deals that require substantially more money than you have available. Of course you will have to share the proceeds with your other Joint Venture partners but a percentage of something is better than 100% of nothing as they say.
Naturally the percentage that you receive, your share, is governed by how much you invest. Our Property Joint Ventures will often also involve us investing our money as well. That’s a sort of ‘put your money where your mouth is’ philosophy, though that’s not a hard & fast rule as sometimes the circumstances may not allow it. What is a hard and fast rule is that we will manage the Property Joint Ventures ourselves, properly &
thoroughly, through to fruition.
It’s not unrealistic to get annualised returns between 20% – 40% or more in these property joint ventures – that’s why people do them so why wouldn’t you?