What are Joint Ventures, and how do they help property developers?
At John Howard Joint Venture Fund, we are looking to invest our private funds into your property development project as a joint venture opportunity. Many property developers, whether they’re just starting out or more experienced, can struggle to find the funds to complete the purchase of their first/next property project.
What I aim to do with the joint venture fund is to provide the much-needed finance to your property development project. In return for a 50:50 share, I offer my expertise and contacts as your joint venture partner. But, before this is an option you consider, what is a joint venture?
What is a Joint Venture Agreement?
A joint venture (JV) is commonly recognised as a business agreement between two or more parties. In our case, this is between you and me, John Howard. The idea behind JVs is that two heads are better than one! Therefore, together we can pool our resources to achieve a shared goal, in this instance, to complete a property development project.
Within these agreements, there are not only combined resources but also combined responsibility. As joint venture partners, we would share the accountability of profits, losses and costs associated with the build. However, it is worth noting that the venture is its own entity and will be considered completely separate from either participants’ additional business interests.
How does the John Howard Joint Venture Fund Work?
When purchasing a property for your next investment, one of the first things your will need to arrange is who will organise your senior debt. Some developers can fund this themselves, but many turn to the banks. A bank will typically lend around 60% to 70% on a first charge basis. However, the rest will need to be found.
With our Joint Venture Fund, we can make up the balance to purchase the property, and in some cases, we can arrange the senior debt.
Our partnerships are agreed on a 50:50 basis. Any money initially lent by the bank is instead used towards the build costs.
So, how much will a Joint Venture Agreement cost you?
It is important for you to understand the flip side of JVs. Yes, your partner will provide you with financial funding, allowing you to go ahead with your development project. But what costs will this leave with you?
There are no fees for a joint venture agreement with John Howard Joint Venture Fund.
However, it is key to point out that if you have money to invest in your deal, it is advisable to do so. Self-funding will help to reduce any interest rates on lending and, therefore, reduces your risk. This is not always possible, though. If you are not able to invest, these are the costs you will need to consider: solicitors purchasing fee, any bank and valuation fees, stamp duty tax and, if applicable, agent finders fees.
When the property is sold or refinanced at the end of a project, interest is often paid off. Then your company will own the property. If you would like more information on our joint venture agreement, get in touch today. Send your queries to email@example.com; a member of my team or I will reply as soon as possible.