Forums / Getting Technical / Finance / How to structure a syndicate or JV?

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  • PerthPropertyHunter
    Participant
    @perthinvestor
    Join Date: 2014
    Post Count: 12

    Hi all,
    I am a buyer’s agent in Perth that targets the developers/investor niche. I have come across a developer recently whose money is tied up for the next 12 months. It got me thinking (again) about how people form a syndicate or JV who are cash poor so as to keep moving forward. I did talk to a mortgage broker about it but he seemed to know as much as me. Thought I would put it out to the collective brain in this forum ;-)

    Gavin
    http://www.perthpropertyhunter.com.au

    Profile photo of Kinnon BellKinnon Bell
    Participant
    @kinnon
    Join Date: 2014
    Post Count: 151

    Form a JV partnership with a cash/equity partner. That is providing they can bring serviceability or some other expertise to the table. There’s a lot of qualifiers to get it over the line with banks though and a lot don’t like it when there’s unrelated parties borrowing. Tricky but not impossible (usually!). Some will do it as resi lending (development size dependent) and some may only do it as a commercial lend. There’s a lot of variables to be taken into consideration.

    Just need to make sure it’s set up in the correct structures and every step of the way is mapped out beforehand in a contract including contributions, exit strategy, profit share %’s, contingencies etc etc

    Kinnon Bell | Kinetic Funding
    http://www.kineticfunding.com.au
    Email Me | Phone Me

    Mortgage & Personal Loan Broker based in Cairns and Melbourne but servicing clients Australia wide.

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,058

    Basically
    1. via loans
    2. via ownership

    One party can lend to the other and/or the parties can jointly own the property, either directly of indirectly.

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    PerthPropertyHunter
    Participant
    @perthinvestor
    Join Date: 2014
    Post Count: 12

    Thankyou Kinnon and TerryW for your thoughts, much appreciated

    Gavin
    http://www.perthpropertyhunter.com.au

    Profile photo of Kinnon BellKinnon Bell
    Participant
    @kinnon
    Join Date: 2014
    Post Count: 151

    To add to Terry’s post too, which I forgot to put in mine is the lending of cash behind the scenes. I have one client at the moment who is looking into JV’s for small scale developments and one scenario that is being entertained is that the cash partner of the deal lends the money to the JV/serviceability partner and all lending in done in their name (ie trust) which makes it a bit less complicated.

    Kinnon Bell | Kinetic Funding
    http://www.kineticfunding.com.au
    Email Me | Phone Me

    Mortgage & Personal Loan Broker based in Cairns and Melbourne but servicing clients Australia wide.

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