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Finding JV Partner starting with...

JBagorio

JBagorio

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Dec 4, 2007
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We have to start somewhere, and the best place to start is with the people who we closely know and love. It make sense right? Given that they are the one how know us the most they should be the first we approach. I do agree with this somewhat, but I sill do have mixed feelings. It reminded me with the saying “Don’t mixed pleasure with business”. I have always separated the two and try not to involve my personal life with my business life. I just think it is not a good mix. In the worst case, we are risking the relationship when things go south. I would like to hear your opinion on this.

Thanks in advance!
 
Only involve people that:

a) Fully understand what they are investing in with you
b) Have enough money that what they are investing with you isn`t material to them - ie they can withstand losses if things go poorly - housing prices decline, operating profit doesn`t come in as expected
c) Are willing and able to provide a significant reserve fund at start so that when things go wrong - roof goes unexpectedly, etc.. - there isn`t stress - funds are there and business keeps on chugging along

You should find that there will be very few this applies to
 
QUOTE (housingrental @ Nov 7 2010, 10:14 AM) Only involve people that:

a) Fully understand what they are investing in with you
b) Have enough money that what they are investing with you isn`t material to them - ie they can withstand losses if things go poorly - housing prices decline, operating profit doesn`t come in as expected
c) Are willing and able to provide a significant reserve fund at start so that when things go wrong - roof goes unexpectedly, etc.. - there isn`t stress - funds are there and business keeps on chugging along
This is good advice.

After you exhaust family and friends, go to friend of friends (i.e. one level removed) but then you`re into security legislation considerations !
 
I personally would not involve family unless I had a very solid history of success and they begged me to let them invest but I would do so with trepidation.
Starting out investing I would consider friends under the guide lines of the previous post assuming they are fully cognizant of it being a strictly business arrangement. Friendships end and business relationships begin when money is involved.
 
QUOTE (housingrental @ Nov 7 2010, 10:14 AM) ...You should find that there will be very few this applies to
Nicely put together Adam! Thanks you for summing this up for me. We truly have to put into consideration what level of understanding and tolerance of whoever we engage with before we even bring them it to the picture.
 
I`ve been `actively` talking with all kinds of different people for joint venture relationships. From family to REIN members to friends of members and the advice you recieved from Adam and Thomas here is great.

I`ve been in business my entire life and grew up with the mentality of never to mix family and business. Oddly enough, I was involved with a family business for most of my life and saw major disruption occur within my family, but I digress.

It struck me funny to have family and friends as the first ones to go to for real estate investing but I`m a now an advocate of that. But first and foremost, you MUST develop your own credibility, put your money into your portfolio and build confidence...in time this first level will begin coming to you and you will have much more to offer.
 
QUOTE (JoeRagona @ Nov 7 2010, 02:39 PM) I`ve been `actively` talking with all kinds of different people for joint venture relationships. From family to REIN members to friends of members and the advice you recieved from Adam and Thomas here is great.
I`ve been in business my entire life and grew up with the mentality of never to mix family and business. Oddly enough, I was involved with a family business for most of my life and saw major disruption occur within my family, but I digress.

It struck me funny to have family and friends as the first ones to go to for real estate investing but I`m a now an advocate of that. But first and foremost, you MUST develop your own credibility, put your money into your portfolio and build confidence...in time this first level will begin coming to you and you will have much more to offer.

I agree Joey, my first investor was my brother and he approached me, still took a year to close him + mistakes were made but I always cover my mistakes - and I did.
I still haven`t progressed beyond family, 3 different members have trusted me with their money and none of them are disappointed.

So I guess the lesson is expect to make mistakes but be responsible for them and use that as leverage for the next deal. The first deal I tried to set up with my brother I backed out of and it cost me $1500 out of my pocket... however that indirectly led to a sale of a property that went beyond my greatest expectations
 
QUOTE (JoeRagona @ Nov 7 2010, 01:39 PM) ... put your money into your portfolio and build confidence...in time this first level will begin coming to you and you will have much more to offer.
First of all thanks Joe for your response to the thread! I am also been exposed in a business oriented family all my life. At an early age help my parents run the family businesses and learned the value of integrity, accountability and great leadership. Both of my parents are in business and I owe them the up brining and the entrepreneurial mindset. In the past 20 years (on and off, fulltime or part-time) I have been self employed from building PC, Dot-com, to IT consulting, to now real estate investing. Five years ago got into RE mostly on my own with my own $$$ and purchased 9 properties in the span of less than 2 years. I definitely have the credibility and the confidence built up no question, and I am ready to share the experience and serve my future money partners. I have been talking to all sorts of individuals in the past year and continually learning the type of people out there. The goal is to improve my self in the way I portray that I can be trusted. Truly the challenge is gaining their trust. I do like what Adam said that not all fit the criteria and have the stomach to be in…I just have to choose who I deal with and filter so I don’t waste time.

Thanks all for your input it’s been very helpful! :-)
 
Hi Jason

The critical things are the same as for any business relationship;
[list type=decimal][*]manage expectations,[*]agree on the arrangements and procedures, including how to dismatle when the time comeshave regular, focussed meetings,document, everything.[/list type=decimal]The problem with family relationships in business is when historic behaviour pattens emerge, or the business issues get clouded by family issues, or vice versa. Might be easier to do when going into business relationship well after everyone has established their individual adult lives.
 
QUOTE (JNB @ Nov 7 2010, 07:03 PM) First of all thanks Joe for your response to the thread! I am also been exposed in a business oriented family all my life. At an early age help my parents run the family businesses and learned the value of integrity, accountability and great leadership. Both of my parents are in business and I owe them the up brining and the entrepreneurial mindset. In the past 20 years (on and off, fulltime or part-time) I have been self employed from building PC, Dot-com, to IT consulting, to now real estate investing. Five years ago got into RE mostly on my own with my own $$$ and purchased 9 properties in the span of less than 2 years. I definitely have the credibility and the confidence built up no question, and I am ready to share the experience and serve my future money partners. I have been talking to all sorts of individuals in the past year and continually learning the type of people out there. The goal is to improve my self in the way I portray that I can be trusted. Truly the challenge is gaining their trust. I do like what Adam said that not all fit the criteria and have the stomach to be in…I just have to choose who I deal with and filter so I don`t waste time.
Thanks all for your input it`s been very helpful! :-)

Hi Jason, you are on the right track and the only thing I would comment on is your mindset of `improve myself in a way that I can be trusted.` First and foremost, people will invest with you only if they trust you and this is what certainly you get but most do not. Why do you think they do not trust you after gaining a nice sized portfolio in a short amount of time? There must be another reason and it could simply mean they are just afraid.

You say you have talked to many people over the year, how are you talking to them? Are you asking for money up front? I myself was to the point of actually reaching over and shaking people "don`t you get this???Can`t you see what I`m telling you?" My `aggressive` authentic sales pitch got me nowhere. I stopped doing that and began to talk to people who `get it`. I personally build trust with helping them understand what I do over a long time period and when they see my success, they want to join in. They come to me.

Now there are many other successful members who filter people immediately with the quick `are you in or not` approach and can get away with it - it`s not me, I can`t pull it off.

I think the major point is finding out how you relate to people and use those strengths to build your trust. Don`t be something you are not and eventually you will see people coming to you.
 
QUOTE (JoeRagona @ Nov 7 2010, 08:26 PM) Why do you think they do not trust you after gaining a nice sized portfolio in a short amount of time? There must be another reason and it could simply mean they are just afraid.

Base on the overall result of my networking. It is not so much that they don`t trust me. Of course it could be one of the factors given that money is involved. Some just could not believe that I have done it and would rather do exactly what I have done so they can be like me. Some have no interest at all. Some would do it but not in the position yet. Some question the value of being the expert partner vs. the $$ partner (another big topic to cover). And some are just right out scared to take the step. Some are just not willing to risk the friendship. That is what I really meant when I say I just have to talk to the right individuals. It just all depend on the level of understanding and objectives.

I do like the point you made... "I personally build trust with helping them understand what I do over a long time period and when they see my success, they want to join in. They come to me." I normally introduce my self and what I do in the investing world. I would never ask and bring the money topic up front. I tell them the JV ideas I have and how it works, but may be I should do more on helping them understand and see the long term benefits.

QUOTE (JoeRagona @ Nov 7 2010, 08:26 PM) ...
Don`t be something you are not and eventually you will see people coming to you.

I should be OK in this department :-) I don`t usually have the anxiety around people that I have to pretend and hide who I really am. I am a very people person and it is one of my strengths.

Thank you all for the insightful suggestions. I can for sure go home with a lot of what you shared and use them going forward!
 
QUOTE (Pheenix @ Nov 7 2010, 06:33 PM) ....
.............historic behaviour pattens emerge, or the business issues get clouded by family issues, or vice versa. Might be easier to do when going into business relationship well after everyone has established their individual adult lives.

Thanks Pheenix for the emphasis. This is one of the reasons why I would not mix pleasure with business. I am not saying it will never work. Like you said it takes a level of maturity.
 
Hi Jason,

Sounds great! Good luck with everything, you sound like you know what your `challenges` are so now just climb over them instead of trying to `break through`.

I`m only giving advice on what I have been faced with and how I am overcoming the obstacle - we are all learning from each other so if I can be of more help, please let me know.

Have a fantastic `jv` day!
 
QUOTE (JNB @ Nov 7 2010, 11:46 PM) .. why I would not mix pleasure with business...
If business is not pleasure .. maybe you are in the wrong business !
 
QUOTE (JoeRagona @ Nov 8 2010, 06:44 AM) ....

I`m only giving advice on what I have been faced with and how I am overcoming the obstacle - we are all learning from each other so if I can be of more help, please let me know.

Have a fantastic `jv` day!

Thank you!
 
QUOTE (ThomasBeyer @ Nov 8 2010, 10:09 AM) If business is not pleasure .. maybe you are in the wrong business !

Yessiree!

If you don`t have a track record arms-length investors won`t touch you. Every start up has seed capital from friends, family or close associates.
 
QUOTE (RedlineBrett @ Nov 9 2010, 04:30 PM) .. Every start up has seed capital from friends, family or close associates.
.. or yourself !
 
QUOTE (ThomasBeyer @ Nov 11 2010, 08:57 PM) .. or yourself !


Yes, in fact I think it`s prudent to start there first BEFORE raising any capital. If JVs are the seed, you must be the dirt!
 
QUOTE (RedlineBrett @ Nov 12 2010, 01:21 PM) Yes, in fact I think it`s prudent to start there first BEFORE raising any capital. If JVs are the seed, you must be the dirt!
What would you say the magic number of properties you seeded on your own before you manage other`s seeds to plant in your dirt?
 
QUOTE (JNB @ Nov 12 2010, 02:50 PM) What would you say the magic number of properties you seeded on your own before you manage other`s seeds to plant in your dirt?
3 is a good number to show a "track record" .. more is better .. say 3 sold .. and 2 or 3 owned and active but unsold ..
 
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