While some folks insist on carving their entrepreneurial paths independently, in my experience it’s smart to remain open to collaborations too. Many Progressive Property Community members are forming property joint ventures (JVs) as part of their buy to let business strategy, finding that such arrangements can help investors get faster, leveraged results.
There can be a great deal of hesitancy among entrepreneurs before committing to a buy to let joint venture, but why? Well, the polar downside of a partnership is that you have to give away half your profits – ouch. Partnerships can also break down and fail, and can be messy and time-consuming if they happen to split.
Obviously no one should go into an operational or legal partnership without both eyes wide open, but remember: the potential downsides of marriage are rarely enough to stop folks tying the knot!
While of course I have had business partnerships that haven’t fared so well, I’ve been rewarded with huge positives from a single joint venture partnership with Mark Homer, and achieved results I’d never have managed alone.
I hope that the following positive comments in this step-by-step guide to successful joint ventures will help you when looking at raising finance for your buy to let business.
11 Steps to joint venture success
1. Start building relationships/looking for property joint venture partners before you need the cash.
That way, when you do need it for a buy to let purchase, the relationship is already there. If you already need cash when you ask, it is often easy for potential partners to sense your need or even desperation. No one wants to work with a desperate investor!
2. Get noticed, but without saying “Look at me, look at me!” Make sure to network constantly, both on and offline.
If you network in person just once per week, you will have 52 events under your belt after a year. Share what you know at events and across social media by giving, commenting and supporting, because people will notice your efforts.
If fellow entrepreneurs are able to watch you safely from afar, they are likely to have already formed a positive opinion of you before you have even approached them.
3. Get a leather ’folio from Colemans and use it to record all the buy to let property deals you ever do. Before you’ve even completed your first one, note down a few comparables and deals that you are looking to do, both in your ’folio and in an online version in Google Docs. When asked to show deals that you’ve done or are doing you will then have the social proof, and be several steps closer to selling without selling.
4. Follow up with EVERYONE.Have a semi-script and add some personal notes, things you noticed, and things you liked about the peers who caught your attention.
When you have decided that you see potential in a joint venture partnership, start with one deal together first; there’s no need to get married on the first date.
5. Consider 3-10 ‘touch points’. Most people will consider working with you on or around the 5th meeting/touch point. A few will take less, while many will take 7-10, so start timing when you ‘ask for money’ for a buy to let joint venture around this. Be clear on what you do and what you don’t do, and communicate it. Target a set amount of people at each meeting to exchange cards with, and record a rough estimate of the time spent for each one.
6. Be an ambi-vert. An ambi-vert’s personality lies comfortably between introversion and extroversion. If either extreme is better then it’s the extrovert, but the ambi-vert offers the best balance.
An ambi-vert will be seen helping, sharing, and giving, and will keep learning and growing while staying relatively humble. Remember, you should think of everyone as having money and as an opportunity for a great partnership, or as an opportunity to network through to someone else.
7. Get educated on all the different joint venture structures. This point will take time, but you should think hard about how to create elegant and bespoke solutions through creative structuring. Think long-term and think of serving your partners rather than thinking solely in terms of what you can get out of them, and ensure that you instruct a good commercial solicitor to draw up the partnership. Regarding T’s and C’s, the main things you want to get clear when talking to a buy to let joint venture partner are:
• How you exit
• Entrance/exit fees (hopefully none)
• Early or late charges
• What happens if you can’t pay back all the money?
• What is the rate – fixed or variable, pay monthly or rolled up?
• How are the operational responsibilities divided?
• What security(ies) do you both have in place?
As is always the case, the more you know about joint ventures or a buy to let property, the greater advantage you will have. This is more valuable than having a couple of chunks of deposits, which will run out in no time.
8. Learn the life values of your potential partner. What’s most important to them in their business partnerships, and when lending their money?
Don’t just drill them for answers, of course. Have an elevator pitch that is conversational and that is focused on them, not you. Always leave people having learned something from you, and the clear impression that you gave more than you took – even when your main aim is to learn more about them!
9. Don’t get sucked in to arguments and don’t listen to those who say, ‘You can’t’. One person’s view or forum rant is not reality; it is merely their reality.
10. Keep learning about partnerships, joint ventures, money and influence. Read all the books you can, listen to the audios, go to the training courses and spend your time with the people who will teach you and open doors for you.
11. Once you find one wealthy partner, they open doors for more and more and more. In 2005/6 I had a big chunk of consumer debt and ‘no money.’ I blagged a job at a property sourcing company through desire & willingness to work at it, with the help of my now business partner, best friend & co-founder of Progressive Property.
Final thoughts on joint ventures
I lived off credit cards and scraped by, and Mark financed every one of our deals either through his cash, or through his knowledge of using other means of finance than his own. I made some mistakes and I’ll no doubt make many more – but I did it.
Flash forward to the present and we have a joint venture taking place: an almost 15,000 square feet conversion into residential with a joint venture partner who we have gotten to know and become friends with over the years, and who funded the full venture [who – Mark or this JV partner?]. My business partner manages the project, and we split 25/25/50.
Look to serve your joint venture partners, overcome the challenges and don’t be like the few who are getting bad press for not doing them properly.
Remember: even in the most unlikely spaces, anyone you meet could be a potential property joint venture partner or business partner.
There are hundreds and maybe more people in the Progressive Property Facebook Community who have raised joint venture Finance or found partners there, many with no start-up capital or experience.
If I can do 650+ deals with other people’s money and get Mark Homer giving his cash away, then anyone can!
Best of luck with your property joint ventures and partnerships.