Understanding Joint Venture Deals

[Michael Lopez]

I have recently found myself in what I believe to be a great position and would like some advice. I am having a meeting in a week with an investor who made it know that he would like to invest his money with me. I have done one deal many years ago and understand that it doesnt make me an expert at all. I am a Realtor and have done some deals and have been reading and researching for a good year to prepare myself for this moment. I have contractor connections because I have also been in the construction industry in one way or the other, building relationships with these professionals over the years.

Would a joint venture be the best way to do the first deal to build trust with my private investor? I am preparing myself and would like to put a plan and system in place before meeting with him on Sunday.

Would someone here please provide me with some insight as to how you approach a joint venture or if you believe a joint venture would be the way to go?

I did create an s-corp almost a year ago for my real estate investing, and am wondering if making shares of the company available to this investor for an investment into the company?

Please forgive my ignorance in these matters. Although a lot of reading and watching videos can be quite helpful, when the real deal comes up, I want to be sure that I dont make any mistakes that could have been avoided. 

This "private investor" has never invested in real estate before, but has the cash to do deals immediatley. 

Thanks

[Account Closed]

@Michael Lopez Hi Michael, you have a great opportunity in front of you. Here is some basic advice. Treat it as a business, even if they are family or friends. You need a written agreement as to how everything flows. Who is the money investor and their responsibilities, who is the management investor etc. How are the cash distributions handled when a property is sold? Who covers any losses? What happens when one of you chooses to go sailing around the world and no longer wants to be in the venture? What kinds of insurance will you carry? Will you do the rehab yourself or hire contractors? In most jurisdictions, using an LLC is far superior to a Corp when it comes to real estate. Who are you going to use for legal? Who are you going to use for accounting/CPA. When are distributions to be made? Are there any spouses involved? What is their role. How do you pass each partner's portion on if there is a death? What zip codes are you going to cover? Will you do foreclosures, REOs, Buy & Hold, Subject To, Fix & Flips, Notes, Tax Liens? As an agent, do you get the agency fee? Is he interested in a JV or does he simple want to lend money at interest? That is a start. I wish you well and great success.