Investing in JV`s

[BradHillier]

Hi REIN members, i`m slowly learning about this business and what it has to offer. I want to ask a few questions about JV`s and i`ll also throw in some of my reasons/ramblings.

- It seems to invest in most 50/50 JV`s the slient partner lays down the downpayment. I think this is the best way for me to get involved in the business because i can work up to 30days straight. I also think its a very good way to learn the ropes. Assuming your partner knows what he/she is doing.

Since i don`t have many assets and no RRSP`s i believe the only option for me to come up with enough capitial the next few months is a PLC. I just looked at both Bank of Nova Scotia`s and Bank Of Montreal`s. With BMO apparently offering %2 interest and NS %6.5, i must be missing something there.

During the term of the agreement does the slient partner receive any of the monthly rental monies to paydown the VLC?

Do active partners welcome the silent partners to attend some of the negotiations? I like to branch out on my own in due time.

Any thoughts are welcome.

Thanks,
Brad Hillier

 

[DonCampbell]

Hi,

Every JV is unique unto itself and is desgigned by fufilling the two (or more) party`s goals. It is a complex subject to get started on, without any real estate experience. The key is to put yourself in the other party`s shoes and ask `Why would someone give ME $100,000 of their hard earned money to invest? (i.e your experience, your geographic location, your extensive knowledge of a region or property type, your ability to find deals etc etc ) Once you answer that question clearly enough that you can articulate it to others, then you are definitely on your way. Without answering this question of yourself, you will continue to hit brick walls and wonder why no-one will invest.

If you are the money guy to start out, then it is the EXACT opposite. You`ll want to work through the detailed Exercises in the 700 page Joint Venture Secrets package to ensure that you are giving your money to the right person for the right reason. However, if you have the cash and the ability to get financing you reall shouldn`t need to do a Joint Venture as you are learing how the system works through REIN anyway, so you can use the knowlege to move forward. Often times giving 50% away into a JV can be very expensive money if you have the funds and ability to get approved at a bank.

If you are still inclinded to do a JV, check out the JV classified ads on this site to see if any are worth you starting your due diligence on. You will note that I say YOUR due diligence as you will want to doa lot of your own homewrok to make sure the numbers are real and it is a geographic area you should be investing in.

2nd question you ask: Most PLCs if registered against your personal home are going to be priced at the banks prime rate (plus or minus 1/2 point). These will also be interest only in most cases as well.

Trust this all helps!

 

[BradHillier]

Thanks Don, while its clear what you say, its has clear has mud where i should go from here.

 

[DonCampbell]

Hi Brad,

What more specifically would you like to know. JV`s are a very detailed subject, I`d be glad to directly answer any direct questions you have.

Looking forward to helping you achieve your JV. I (and your fellow Members) will be watching for your questions so we can all provide you our insights!

 

[NickStewart]

Brad - I would presume that if you work 30 days straight sometimes, you also get similar stretches of time off. If that`s true, what is stopping you from assembling your own team (realtor, mortgage broker, home inspector, lawyer, property manager) and buying 100% of a property yourself?

If you have the right team, and you find the right property, it can be very much a hands-off investment as well...

Having said that, I and many others in REIN would welcome you as a silent JV partner if that`s the way you really want to go, but I`d encourage you to give some thought to following the system and buying your own property. It`s not that tough, especially when you follow the system, build the right relationships and most importantly TAKE ACTION!

Hmmm.... systems.... relationships.... follow through.... I can`t help but feel I`ve heard that somewhere before

Good luck!

Nick

 

[BradHillier]

QUOTE (DonCampbell @ Oct 24 2007, 07:45 AM) Hi Brad,

What more specifically would you like to know. JV`s are a very detailed subject, I`d be glad to directly answer any direct questions you have.

Looking forward to helping you achieve your JV. I (and your fellow Members) will be watching for your questions so we can all provide you our insights!

Well, after reading your original post i realized a JV would most likely handicap me - for lack of a better word - in regards to capitial for further investments, until my equity increased. However, i`m not too sure how fast i really want to build my portfolio.

I`m just diving in this exciting business and have all kinds of ideas running through my head. My best bet is probably joining REIN when i get out Alberta sometime in Nov and picking the brains of all the fanatastic investors in the REIN.

But has you can see i already started that.

I do have a question though: Can one build a portfolio slowly? I assume so if i have a steady income. Its not really a race has you said in your excellent book.

 

[BradHillier]

QUOTE (NickStewart @ Oct 24 2007, 07:52 AM) Brad - I would presume that if you work 30 days straight sometimes, you also get similar stretches of time off. If that`s true, what is stopping you from assembling your own team (realtor, mortgage broker, home inspector, lawyer, property manager) and buying 100% of a property yourself?

If you have the right team, and you find the right property, it can be very much a hands-off investment as well...

Having said that, I and many others in REIN would welcome you as a silent JV partner if that`s the way you really want to go, but I`d encourage you to give some thought to following the system and buying your own property. It`s not that tough, especially when you follow the system, build the right relationships and most importantly TAKE ACTION!

Hmmm.... systems.... relationships.... follow through.... I can`t help but feel I`ve heard that somewhere before

Good luck!

Nick

Funny, I`m reading over the systems now in Don`s book for second time.

I really need to get out west before i take any concrete action, i`m sitting in Newfoundland right now.

 

[jeremyfleming]

Hi Brad,You sent me a great question via email, and I am sure a ton of other non-REIN members are wondering the exact same things you asked me, so I will answer your question here for the benefit of all.

You asked "How do people usually come up with this money (to Joint Venture) - loans, cash, mortgage?"

You are absolutely correct - you answered your own question! I have had partners use their own cash, line of credit and RRSPs up to this point. As well, as Russel teaches at Quickstart an in his JV Secrets manual, I have also had partners use a Home Equity Line of Credit - specifically created to invest in real estate.

RRSPs are a senior strategy that I learned as a REIN member as well. There are a ton of places for people to find money to invest with. Just use your imagination (and this forum

).

Hope that gets you started.

Jeremy

 

[MikeMcCrae]

One more thing to remember, a PLC (personal line of credit) and a HELOC (home equity line of credit are different things. A PLC can not be used to show down payments where a HELOC usually can. A PLC is considered a loan and a Heloc is considered as accessing equity. Often the rules do not allow for borrowed down payments.

 

[Maximillion]

BMO is not offering 2% interest. I copied the info from their site for you below. You must only pay 2% of outstanding balance:

"Minimum monthly payments are 2% of the outstanding balance or $50, whichever is greater. "