[
]Hi There,Being a newie to property investing I was hoping one of the more experienced members could help me with a template or draft of a Joint Venture Agreement?
My Mum wants to partner me – if I ask her to contribute financially and I do all the work (ie the research, etc) is there a standard % in how you split the profits? Would it be best to set up a company? I am concerned that once we get going and build a substantial I/P portfolio, should something happen to either one of us (god forbid) then the other will need to sell everything – are there ways around this?
Really excited with what I have learnt so far from accessing this site and greatly appreciate any replies.
Cheers[
]Hi Ya
Can’t help you out with a template as I think it is best that you speak with a solicitor re this.
With your other questions though re research vs $$. There are a few people around who are doing a 50/50 split on the profits and losses.
If you are going to build up a substaintial portfolio I would suggest you look at setting up a discretionary trust (which costs about $1400 for the initial set up and about $200 for yearly tax appraisal) A trust will protect your asset where as with a company you are left wide open. An accountant can assist with this.
If you haven’t got Steve’s book Wealth Guardian the investment is probably worth while as it covers pro and cons of Company’s, Trusts etc.
Happy investing
BB[8D]Thanks BB – I appreciate your help.[^]
BB is right on all counts, and I would like to add that the other way you may like to do a deal with your mum is that (assuming you can find suitable properties with high enough returns) you could simply use her equity (the $ she gives you) and then pay her say 12-15% interest on it.
The difference between the two methods is that generally under BBs way your mum would also get the loan (i.e. she would provide ALL the money) and under the above option, she only provides the deposit money and then you arrange the finance for the rest in your (or your structures) name.
Tas [
]Hi All,
I was trying to offer same sort of thing with all my logic but other people can’t seems to get. I ask some one to to use their equity for 20% deposit and we take 80% loan and loan will be 40% on each name. So sort of we are investing 60% and 40%. And I offer we will share 50% each because other person is not going to do anything ( sort of Silent partner ). Which According to me is fair but it didn’t work with that person.
Do you guys think I was some how wrong in putting numbers together.
Thanks
Amit
What you were asking your partner to do was give up 16.7% of their share of the property (reduced from 60 to 50) and increase your share by 25% (from 40 to 50). This to be in exchange for your time and effort in managing the property.
But percentages can be confusing. Lets say the current value of the property is $100,000. Then your partner didn’t believe that giving up a 10% share of the property(currently $10,000) was worthwhile for you managing the property.
They probably saw it as effectively giving you $10,000 of their $20,000 deposit.(All based on the fictional $100,000 value, but you get the point).
Often emotion plays more of a role than logic in these decisions. It really is all about the way you package the proposal – maybe you could have retained the 60/40 split and negotiated a $ price for you to manage the property, to be deducted from the gross income (especially if income rather than capital growth was the objective in purchasing).
Hope this helps!
Brianhc[
]Thanks Brianhc,
I am also thinking same as you now Even if I don’t get anything other then 40% I think deal is not bad for me ( being +ve flow property). I think I should not be greedy when I am not putting any money [
].What other people do if they get equity partner ?
Cheers
Amit
]Hi There,
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]The topic ‘Draft Joint Venture Agreement’ is closed to new replies.
