How to Overcome
the Biggest Obstacle
with
Joint Venture Partnerships
by Julie Broad
"So let me get this straight. You're putting in $5,000 and I am putting in $65,000 and then
we're splitting the deal 50% / 50%? I am just getting stuck on this concept." says Jane*.
 Jane is a busy business owner with two kids. She has some money, would like
to get into real estate, but hasn't had time. She contacted us to see if we could help her with a
joint venture partnership. We presented her with one of our upcoming deals. This particular
deal is one of the best deals we've ever had - we're getting it significantly under market value, it's in our
target market area where we have the highest demand from rent to own tenants, and it's a gorgeous property.
The curb appeal and condition of the home is excellent.
When it comes to the deals we do, this is pretty close to as good as it gets.
When we first began speaking with her she was thrilled that we were projecting a 16% per year return on her
investment, but now she's long forgotten about that and is hung up on the fact that she puts in most of the cash
and we still split the deal 50% / 50%. Her return is still going to be a bit better than 16% per year, but she's
stalled out now that she's seen what the deal looks like on paper.
She's not alone.
This is the single biggest objection you'll hear when you start presenting deals to
potential joint venture partners.
It's actually a funny objection when you think about the fact that many of these same people also invest in mutual
funds where they pay their advisor whether the advisor makes them money or not, and the mutual fund manager is also
making money regardless of whether they do. In this scenario the ONLY way we make money is if our partner makes
money. In other words, if the deals aren't making money, we're not getting paid at all.
When you're faced with a similar situation you may want to shake the person to wake them up. I know that's how we
feel sometimes, but that isn't the best way to handle the situation. Here's what I recommend:
#1 - Know Your Value as a Joint Venture Partner
We have invested hundreds of hours into becoming area experts. We have invested thousands of
dollars into marketing so people call us when they have a home they are thinking of selling. And, in this specific
case, this deal FINALLY came to fruition after six months of communications back and forth with the sellers AND
only because we were the only party able to make the deal happen in 24 hours when they found a house they wanted to
buy in their new city. If this was the only deal we did this year and we split the deal 50% / 50% with her, we'd
probably be making less than $5/hour for our efforts.
In other words, it is our partner that is getting the tremendous deal on this property. We bring enormous value to
the table and her contribution to match all the effort and experience we're putting in, is to only the majority of
the funds for the deal.
If you've gone to all the effort to educate yourself on real estate investments, find a great deal, and get it
locked up I should not have to tell you how much you're bringing to the table when you offer someone a great deal.
Not to mention, your work is not done. You're going to place tenants, oversee the property and ensure things run
smoothly.
Be confident in the value you're bringing to the table. If you aren't, make a list of EVERYTHING you have to offer
in a partnership. The list is probably bigger than you think.
Real estate investing takes time, effort and expertise. It's not easy. That is worth more than money if you ask
me.
#2 - Look for Fit -not everyone with money is a good prospective joint venture partner
Think about who is your ideal joint venture
partner. Our ideal joint venture partners want to be hands off because they are very busy, have at least
$60,000 to invest, can qualify for financing, and are likely to do more than one deal with us. We are looking to
build long term relationships with our partners. Most of our partners are repeat partners and that is
exactly how we like it!
What are you looking for? Make sure you know and then you spend time qualifying them.
In other words, you're not asking anybody for money, you're offering a specific person a great opportunity to
invest in real estate and make a great return on their money, without having to worry, work or wonder what to do
next.
Some people with money want to do the work. Some people with money will be a pain in the butt. Don't be afraid to
be a reluctant partner ... and when you are, you just might find people are more eager to work with you and are
less concerned with the 50% / 50% split issue.
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