Hello REIN experts.
First of all, I want to thank REIN for giving me the know-how and courage to begin my real estate investment back in 2008. I was lucky and invested 4 properties in Edmonton between 2008-2009. Since the investment has already been 5-years, I recently sold two properties with a bit of profits (thank you REIN!).
Now that I have some capital, I want to move back to Vancouver. Yes, I know it's the most expensive market in Canada. But I grew up there and I want to be able to live there and be close with family. Anyway, to make the long story short, this is the scenario:
This is what both parties bring to the table:
Couple A (that's me)
- provide 35% down
- qualify mortgage (Couple B have poor credit and little income to proof)
- provide basic sweat equities (ie painting, cleaning, demolition?)
Couple B (my friends)
- provide renovation know-how
- provide discounted rates on trades for licensed electrical and major plumbing issues
- very handy, cabinetry, tiling, flooring, some plumbing and some lighting (not licensed)
- design work
- stronger cash-flow
I want to propose my friends a joint venture deal where I can save on renovation cost (I am not a handy-man), share living expenses (ie: mortgage, utilities etc) while both couples reside in the property, and a chance to greatly improve the premise for future sale. At this point, I am thinking of a 2-3 year window that will give us the time to fix the property while all of us are busy with other projects. This opportunity will help both parties build capital for the future.
This is what my initial thought on the proposal:
Property Closing Costs:
Couple A and B share 50 /50
Fixed Living Expenses:
Couple A 40% / Couple B 60%
- Since Couple B don't have a lump sum down payment to contribute to the joint venture, and we have a weaker monthly income, I think it's fair for my friends to be responsible for more monthly expenses. My friends need a place to rent anyway, so why not put it towards this joint venture instead of making another landlord rich?
Renovation Expenses:
- Share 50 / 50 on materials and hired licensed trades cost
- Couple B is responsible for all design work, provide sweat equalities on renovations (I will have to spell out what exactly they can do)
Sales of Property Cost:
- Share 50 /50 (ie. realtor fee, property transfer tax, lawyers etc, upon selling)
Ownership:
Couple A owns 100%. Couple B is secured by a two-year agreement.
Profit-Sharing:
When there is property appreciation, Couple A gets his down payment back and split profit 50/50 with Couple B.
So based on what I described, is this a fair win-win joint venture for both parties?
Thank you!
Tommy
First of all, I want to thank REIN for giving me the know-how and courage to begin my real estate investment back in 2008. I was lucky and invested 4 properties in Edmonton between 2008-2009. Since the investment has already been 5-years, I recently sold two properties with a bit of profits (thank you REIN!).
Now that I have some capital, I want to move back to Vancouver. Yes, I know it's the most expensive market in Canada. But I grew up there and I want to be able to live there and be close with family. Anyway, to make the long story short, this is the scenario:
This is what both parties bring to the table:
Couple A (that's me)
- provide 35% down
- qualify mortgage (Couple B have poor credit and little income to proof)
- provide basic sweat equities (ie painting, cleaning, demolition?)
Couple B (my friends)
- provide renovation know-how
- provide discounted rates on trades for licensed electrical and major plumbing issues
- very handy, cabinetry, tiling, flooring, some plumbing and some lighting (not licensed)
- design work
- stronger cash-flow
I want to propose my friends a joint venture deal where I can save on renovation cost (I am not a handy-man), share living expenses (ie: mortgage, utilities etc) while both couples reside in the property, and a chance to greatly improve the premise for future sale. At this point, I am thinking of a 2-3 year window that will give us the time to fix the property while all of us are busy with other projects. This opportunity will help both parties build capital for the future.
This is what my initial thought on the proposal:
Property Closing Costs:
Couple A and B share 50 /50
Fixed Living Expenses:
Couple A 40% / Couple B 60%
- Since Couple B don't have a lump sum down payment to contribute to the joint venture, and we have a weaker monthly income, I think it's fair for my friends to be responsible for more monthly expenses. My friends need a place to rent anyway, so why not put it towards this joint venture instead of making another landlord rich?
Renovation Expenses:
- Share 50 / 50 on materials and hired licensed trades cost
- Couple B is responsible for all design work, provide sweat equalities on renovations (I will have to spell out what exactly they can do)
Sales of Property Cost:
- Share 50 /50 (ie. realtor fee, property transfer tax, lawyers etc, upon selling)
Ownership:
Couple A owns 100%. Couple B is secured by a two-year agreement.
Profit-Sharing:
When there is property appreciation, Couple A gets his down payment back and split profit 50/50 with Couple B.
So based on what I described, is this a fair win-win joint venture for both parties?
Thank you!
Tommy