How to write a Purchase Offer with JV

[David]

I am getting ready to make a purchase offer on a single family property and plan on using a JV for the first time. I was not planning on a using a JV yet, but I had a house come up for sale that I have been waiting for a long time and coincidentally, I had a friend that is interested in doing a JV. My question is, who do you write on the purchase agrement for the buyer? Do I use both of our names or can I use my name and/or assingee? What is the pros and cons of each way? The reason for the questions is I have not had my potential JV partner pre qualify for a mortgage yet and did not want to put his name on incase he does not qualify. Is it possible to change names on the agreement after it has been accepted and if so what problems can arise? I want to make sure I do this right as I want to get an offer in right away so I do not potentially loose the deal. Any help or suggestions would be appreciated.






Thank you,




David

 

[Thomas Beyer]

[quote user=David]...and/or assingee?



Yes, use that.



The bank needs to know who is the qualifying person or persons.



Another option, if you know you can close with your own money and qualify, is to close by yourself, then sell 50% (or 33% or whatever%) to a JV partner for X $s later !



You could also have a clause allowing you to assign contract to any party without the seller's permission.

 

[GaryMcGowan]

You can do a few things with the P&S.

1> Buyer... Your name and or Assigns,

Some sellers do not like this and will cross out the Assigns

Some lenders do not like this.



2> Have a Condition that allows to change the name of the buyer

We use this often



3> Put your JV Partner's name as the buyer from the beginning

This is the cleanest.





At the end of the day in order to get the financing approved the P&S will have to be in the name of the buyer who will be qualifying for the mortgage.



Do not wait to have a property under contract. Get your Partner to talk to your Mortgage Broker as soon as possible. The MB will have a good idea of what will be required.

 

[David]

Thanks for the replies. My plan of action is for the JV and I to buy the undervalued property (approx 20% below value) with cash, me 50% and JV 50% and then in a few months after a few repairs, get it appraised for actual value, qualify for a mortgage with both of us on it for 80% LTV and that should give most of our cash back. I have done this on my own and seems to work very well. I just recently purchased a house this way and have most of my money tied up until I refinance and for this reason is why I can not do it on my own right now. What are the consequences of putting the JV's name on the purchase agreement and him not qualifying or backing out? Can I remove his name after the offer has been accepted? I will be talking to the mortgage broker first thing tomorrow as well with my realtor to put an offer on the house. Does anyone have any suggestions or tips to try to make this go smoothly? Also once the purchase offer is accepted, is that when the JV agreement is done up by the lawyer? I have already started a "who does what list" for the lawyer to put in the JV agreement.

 

[Thomas Beyer]

Ensure the person who does most or all of the work gets compensated, in cash or via equity.

 

[johnsu]

Also if you're requiring the JV partner's money to close deal make sure it's his deposit money into the deal first so he's got skin in the game. Many JV's have walked away from the deal because the deal and deposit was in the "expert's name" and the JV got cold feet and backed out cause they've got no skin in the game