Joint Venture Structure

[Raj Kumar]

Hello All, 

              I have a question on joint venture with my contractor. The contractor who I have worked with my previous projects has come up to me with a deal. The deal is with a commercial building which has 2 apartments on the 2nd floor and business on the first floor. The plan is to use the building as a rental and share the profits @ 50/50 ratio.

I will be responsible to

1. Finance to purchase the building.

2. Finance to purchase the material for renovation.

Contractor is responsible to

1. Renovation of the building.

2. Management of the property.

Purchase Price : $50,000

Renovation material price estimate : ~$50,000

Rent1 : $1250.00

Rent2 : $1250.00

Rent3: $2000.00

He wants to be part of the deed of the building. He wants to get share of the potential appreciation of the building. He does not have good credit. I want to cashout refinance after the renovation. With him being on the deed, I do not think I will be able to cashout refinance. What is the best option to structure the joint venture? Is there a way that I can be sole owner of the building but still can satisfy his profit sharing with rentals and appreciation?

Thank you all for your advise.

[Account Closed]

You don't need a partner! There are many contractors out there that will work for you for a fee, 50% is a very expensive partner, don't give 50 percent of your deal away ---- if the contractor was so smart - he'd be doing his own deal and probably wouldn't bring you in!

Don't do it.......unless you lack the confidence to do it yourself! If that's the case - get some real help.

Only my opinion.