Is it a good idea to take on a bigger project (which you couldn’t really handle by yourself) and go into a venture with a number of people from this site ?
You attended a real estate meeting at Five Dock say and thought that the eight or so people there were all nice guys so you went into a venture building ten town houses together.
Would this be a good idea or could there possibly be some pitfalls ?
Sorry, I didn”t quite hear what you were saying. What kind of problems could there possibly arise between eight good guys ?
Personally I wouldn’t have a clue so perhaps someone else may be able to comment ?
Pisces
hi pisces. remember it is a business relationship so where money is involved i would speak to a lawyer, have contracts in place etc etc.
important to know the roles, obligations etc of each person
Yes I agree, it goes without saying that there ought to be a written agreement between the parties.
What do you think however what should go into such an agreement ?
Care to assist Aussierogue and put a draft together
(using the 10 townhouses development proposal as an example) ?However my question was what kind of pitfalls.
O.K. you are right, not having a written agreement could cause misunderstandings. But what else could cause a problem ?
Or is it better to play it by ear ? After all we all have the same outlook (i.e. to make some money in real estate) and we all are full of goodwill to each other).
Pisces
g’day again
what i would do is this. find a lawyer who has experience in this type of setup. what they should be able to provide you with is a ‘proforma’ contract ie a contract already in use for the same purpose.
it is impossible for you to think up all the possible scenarios when one has no experience. the work has already been done all you need to do is find the information.
hope this helps
ps – i used to live in five dock. great fish and chips in dramoyne (spelling)
cheers
Hi,
>>find a lawyer who has experience in this type of setup.<<
How do you find such a person ?
What do you think that will cost ?If you go this way (not necessary in my opinion anyway) it may be a good idea for you to first come up with a draft so as to save some costly solicitor’s time.
>>it is impossible for you to think up all the possible scenarios when one has no experience.<<
This then begs the question whether one really should ought to go into a joint venture if it is going to be a matter of ‘the blind leading the blind’.
The next question would have to be ; O.K. I accept that I (and my partners) are inexperienced so how can we break into this field ?
Any thoughts on that Aussierogue.
BTW, I am NOT looking for partners. It is hard enough having to cope with my wife putting her nose into
my affairs let alone the wives of other possible joint venture partners.If you have had an opportunity to have read the article (which I mentioned elsewhere) about John Saunders (of Westfield fame) you would know how he and his partner Frank Lowy thought about that aspect.
Pisces
pisces – youre making life complicated.
all i can tell you that in business this would be a usual course of action.
if you are looking to merge or aquire or doing something thats complicated the first thing you do is find a team that has done it all before.
rather than being expensive its the cheapest way to go. if you get a lawyer to develop a contract from the start this will cost heaps. if there is already one in use then use it. its just a matter of the lawyer going to his filing cabinet photocopying the contract and changing a few hings like the poeples names etc etc.
they are easy to find – look up the yellow pages call them and ask them if they have expertise – free….
ref blind leading the blind. im not sure i read it that way. more understanding your limitations and then getting the best advise…
i reckon your just up for a bit of tuesday morning debate!!! hehe[
]unforseen things that can happen include:
-one or more parties deciding they want to pull out prior to completion.
-blow out in costs, one or more parties not being able to come up with more money
-one party going bankrupt or getting into some trouble. creditors could possibly come after their asset.
-borrowing capacities being effected-may prevent you from doing other deals
-All parties, jointly liable for the project.These can all probably be resolved if you plan ahead.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
>>rather than being expensive its the cheapest way to go. if you get a lawyer to develop a contract from the start this will cost heaps. if there is already one in use then use it.<<
I doubt, Aussierogue, that we would get the benefit of an existing agreement. The only one who would benefit is the lawyer who would have an easier task and still charge one for the full cost. [
]>>they are easy to find – look up the yellow pages call them and ask them if they have expertise – free….<<
Unscrupulous bastards many of them are I doubt they would admit not having the experience or expertise. Most would, I would expect, say that they are eminently capable of handling the job. [8]
Yes, you are right, the thread is to create discussion (but not because I happen to be in need of details).
Thanks Terry, you have indeed brought up some good examples of pitfalls which do happen in life and which can cause untold problems if not addressed and considered beforehand.
Thanks.
Any other pitfalls guys ?
Pisces
>>ref blind leading the blind. im not sure i read it that way. more understanding your limitations and then getting the best advise…<<
Good point Aussierogue.
Pisces
Pisces said:
“BTW, I am NOT looking for partners. It is hard enough having to cope with my wife putting her nose into
my affairs let alone the wives of other possible joint venture partners.”Kill two birds with one stone Pisces- marry one of the guys from FiveDock.
Aren’t your affairs your wife’s affairs too? Or am i being old-fashioned here?
kay henry
now come on kay, of course all the little women should just be baking pies for the menfolk so there’s something warm on the kitchen table when the husbands come home from building their empires before the females fulfil other “wifely” duties. [
]Hang on, now I’m the one who’s being old fashioned… [
]
cheers
rHave a look through API magazine for the last year. They had an article on setting up syndicates and what you needed to cover in agreements. They described an actual development and how they did it.
You are only saying that Richmond because your better half happens to not be in the room looking over your shoulder.
Pisces
>>Kill two birds with one stone Pisces- marry one of the guys from FiveDock.<<
Life is ironic isn’t Kay. The guy I have my eye on at Five Dock has the hots for you [
]>>Aren’t your affairs your wife’s affairs too? Or am I being old-fashioned here?<<
I thought you would know the difference between men and women.
It isn’t a matter of one being better than the other. The facts are that men just appear to be making decisions in a more rational manner.
For example, I married my wife for her money (rational decision making) whilst she married me for more emotional reasons. (I hope everyone realises that this is just an in bad taste joke).
Pisces
Which paragraph ?
BC
I wanted to form a property syndicate with people I knew.
First steps in my books:
get the people
set ideas
work on a plan- goals (you might find you have differing agendas)
work on the details
sift out the drift wood
organise, task and research
Then take it further if you think you can make it work
a contract is a must- or legal set upThis is what I organised for the group that wanted to do this, but it never happened, as they were not serious, the tyre kicking variety….
so please feel free to add, but this was my basic starter:Outline: Investment Clubs are a way to maximise property portfolios (or any other type of investment) for those that either don’t have the experience, or the funds, or the time etc. The group forms, decides on strategies and research, meets and makes to acquire properties. The idea is to be social and have some fun with like minded people.
Objectives: can be decided once the group is formed, but initially this will be property acquisition. I am looking at least 12 month commitment, so if you cannot devote to this then perhaps you should rethink?
What you need to do for the first meeting to save time
· Structure: research what structure the group would be best served under, eg company, partnership?
· Name: not as important at this time, but something to consider.
· Meeting dates and times- to suit the majority, give it some thought, rotate meetings, times etc.
· Membership: how many? I have done some preliminary searches, so I can discuss this, think about the number of people, the more we have the better resources we can use for eg research, activities, roles, responsibilities etc. However the more we have the more diversity the ideas are. Think too, the greater the numbers, the issues which can arise when trying to reach a decision. At this point I have invited 6 people, this may increase to 8 or 10, but for manageability it would be easier with less than 12 people. The aim is to keep smaller, and be more social with one another, to see positive results.· Roles and Responsibilities eg, rotate? Set for periods, this will depend on the structure chosen, but flexibility might help spread the roles around.
I would be looking at a minimum commitment of 12 months, but we would all need to discuss this, along with deposit. We will need legal advice and tax advice to maximise the groups potential and make clear its intent. Please do your own research to satisfy initial needs and concerns, come prepared!
Please indicate if you are or are not interested in taking this further.
it is like anything, set it up right at the beginning…
just my thoughts anyway
Eight nice guys divided by one problem equals eight very shitty guys! [8]
(oops, am I allowed to say that?)
Max Hugen [email protected]
Alpha Financial
Residential & Commercial Loans
http://www.alphafinancial.com.au
02 9560 3061“..find a lawyer who has experience in this type of setup. what they should be able to provide you with is a ‘proforma’ contract ie a contract already in use for the same purpose.”
It is not likely a lawyer will release a draft agreement – these documents are generally used to prepare all agreements/contracts.
Below is an outline of terms and conditions that should be considered/included in a partnership agreement.
Have a qualified lawyer prepare the partnership agreement – do not try to save a few dollars preparing it yourself if not qualified.
FORMATION OF JOINT VENTURE
· Formation
· Name
· Principal Place of Business
· Registered Office
· TermDEFINITIONS
BUSINESS OF JOINT VENTURE
· Permitted Business
NAMES AND ADDRESSES OF PARTNERS
ROLES AND RESPONSIBILITIES OF PARTNERS
RIGHTS AND DUTIES OF THE PARTNERS
· Management
· Number, Tenure and Qualifications
· Certain Powers of the Partners
· Liability for Certain Acts
· Partners Duty to Devote Time
· Partners may engage in Other Activities
· Bank Accounts
· Indemnity of the Partners, Employees and Other Agents
· Resignation
· Removal
· Vacancies
· Compensation, Reimbursement, Organization Expenses
· OfficersRIGHTS OF PARTNERS
· Limitation of Liability
· Joint Venture BooksMEETINGS OF PARTNERS
· Required Meetings
· Place of Meetings
· Notice of Meetings
· Meeting of all Partners
· Record Date
· Quorum
· Manner of Acting
· Proxies
· Action by Partners without a Meeting
· Waiver of NoticeCONTRIBUTIONS TO THE JOINT VENTURE AND CAPITAL ACCOUNTS
· Partners’ Capital Contributions
· Additional Contributions
· Capital AccountsALLOCATIONS, INCOME TAX, DISTRIBUTIONS, ELECTIONS AND REPORTS
· Allocation of Profits and Losses
· Special Allocations to Capital Accounts
· Priority of Distributions
· Limitation upon Distributions
· Accounting Principles
· Interest on and Return of Capital Contributions
· Loans to Joint Venture
· Accounting Period
· Records and Reports
· Returns and Other Elections
· Tax Matters Partner
· Certain Allocations for Income Tax PurposesTRANSFERABILITY
· Restrictions on Transfer of Partners’ Interests
· Opinion of Counsel
· Violation of Restrictions
· Agreement Not to TransferISSUANCE OF MEMBERSHIP INTERESTS
· Issuance of Additional Membership Interests to New Partners
· Part Year Allocations With Respect to New PartnersDISSOLUTION AND TERMINATION
· Dissolution
· Effect of Dissolution
· Winding Up, Liquidation and Distribution of Assets
· Filing or Recording Statements
· Return of Contribution Nonrecourse to Other Partners
· Death, Incompetency or Bankruptcy of a PartnerMISCELLANEOUS PROVISIONS
· Notices
· Books of Account and Records
· Application of State Law
· Waiver of Action for Partition
· Amendments
· Execution of Additional Instruments
· Construction
· Effect of Inconsistencies with the Act
· Waivers
· Rights and Remedies Cumulative
· Attorneys’ Fees
· Severability
· Heirs, Successors and Assigns
· Creditors
· Counterparts
· Confidential Information
· AuthorityEXHIBIT
THE NAME, NUMBER OF UNITS AND CAPITAL CONTRIBUTION OF THE PARTNERS
— Michael
great post Michael
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