JV advice is needed for a begineer

[spark1]

Hi respected JV investors,

I am about to present my first JV deal to a money-person who looks interested to invest with me. It is going to be my third income property, but it is the first JV. I want to make deal as sweet as I can for my partner, I think he is a gateway for many deals to follow.

Please recall your first JV agreement and let me know how it was structured. I am aware that many of you charge finders fee, Financial managemnt fee, property managemnt fee on top of downpayment, closing and reserve fund. That is may be ok for a seasoned investor, but what about a begineer Finder?
- have you charged the finders fee on your first JV ?
- have you charged the financial management fee (many suggest 3%) on your first JV?
- have you charged (and what % for a 3-4 plex) for property management if you who is doing all propery management?

Thank you,

igor

 

[housingrental]

A) No
B) No
C) Market rates for this - will depend on specifics but likely 10% in Toronto.

 

[ajaysritharan]

Hi there;
On our JV partnerships, we do not charge any of the fees mentioned. In terms of property management, we use professional property managers who charge anywhere from 8-10% of gross rent. This cost comes out of the rental income.

At the end of the day, you have to strike a win-win deal with your JV partner. I think that if the JV partner his providing all the funds and carries, the mortgage, the additional fees mentioned are not necessary. Your 50% stake in the deal will fairly compensate you for your time, effort and expertise.

My recommendation is that you do not charge these fees especially if you are a beginner and determine a appropriate ownership structure with the JV partner. As a beginner investor looking for partners, your goal is probably to build some crediability and a track record. Therefore, at this stage, you may not be able to justify such fees (really depends on what the perspective investor deems reasonable).


Ajayan Sritharan
Investor Relations Manager of Real Experts Inc
www.RealExpertsInc.com


"Buying under-market and cash-flowing properties in the best neighborhoods of the strongest towns."

Quirky research and insights on real estate and the economy at http://realexpertsinc.blogspot.com/

 

[spark1]

Thank you very much Housingrental and Ajayan,Really appreciate your replies.
igor


QUOTE (ajaysritharan @ May 20 2009, 09:54 AM) Hi there;

On our JV partnerships, we do not charge any of the fees mentioned. In terms of property management, we use professional property managers who charge anywhere from 8-10% of gross rent. This cost comes out of the rental income.

At the end of the day, you have to strike a win-win deal with your JV partner. I think that if the JV partner his providing all the funds and carries, the mortgage, the additional fees mentioned are not necessary. Your 50% stake in the deal will fairly compensate you for your time, effort and expertise.

My recommendation is that you do not charge these fees especially if you are a beginner and determine a appropriate ownership structure with the JV partner. As a beginner investor looking for partners, your goal is probably to build some crediability and a track record. Therefore, at this stage, you may not be able to justify such fees (really depends on what the perspective investor deems reasonable).


Ajayan Sritharan
Investor Relations Manager of Real Experts Inc
www.RealExpertsInc.com


"Buying under-market and cash-flowing properties in the best neighborhoods of the strongest towns."

Quirky research and insights on real estate and the economy at http://realexpertsinc.blogspot.com/

 

[Thomas Beyer]

QUOTE (spark1 @ May 19 2009, 02:36 PM) - have you charged the finders fee on your first JV ?

no

QUOTE (spark1 @ May 19 2009, 02:36 PM) - have you charged the financial management fee (many suggest 3%) on your first JV?
no .. but I took 50% of income and equity
QUOTE (spark1 @ May 19 2009, 02:36 PM) - have you charged (and what % for a 3-4 plex) for property management if you who is doing all propery management?

no .. but I took 50% of income and equity

more here on 50/50 – is this fair ? http://myreinspace.com/public_forums/Real_Estate_Discussion/62-2015-5050__is_this_fair_.html

 

[spark1]

Hi Thomas,

Thank you very much! Great link to a JV discussion. Your thoughts are always of a great value.

Any other advices on how I can bend backwards for my money partner to make my first JV a reality? ... and where that fine line when you basically say no and move on to find another money partner?

thank you,

igor


QUOTE (thomasbeyer2000 @ May 21 2009, 12:54 AM) no


no .. but I took 50% of income and equity


no .. but I took 50% of income and equity

more here on 50/50 – is this fair ? http://myreinspace.com/public_forums/Real_Estate_Discussion/62-2015-5050__is_this_fair_.html

 

[Thomas Beyer]

QUOTE (spark1 @ May 21 2009, 05:15 AM) Any other advices on how I can bend backwards for my money partner to make my first JV a reality? ... and where that fine line when you basically say no and move on to find another money partner?
only you can answer that !
10/90 ?
20/80 ?
40/60 ?

or: minimum 10%/year .. then 20/80 or 50/50 ?

What`s in it for you ? Why work for free ?